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TUESDAY, OCTOBER 8 2013
MARKET INTELLIGENCE – 08.10.13
Courtesy of The
Maxfield Report
US PERSPECTIVE
www.themaxfieldreport.com
O
verall, the US market for both big packer
hides as well as cowhides was a little
busier than most had anticipated last week.
The week began with opinions of pundits
that strong forward sales positions by
producers resulting in only a handful of offers,
coupled with holidays in Asia and the annual
United States Hide, Skin and Leather
Association [USHSLA] convention in Chicago
would lead to a lacklustre week of trading.
The consensus was that both sides would
likely use last week to evaluate the market,
especially with HTS prices reaching levels
close to $100 delivered again.
Surprisingly, a number of sources are
reporting many more inquiries/ interest than
they anticipated. A number of sources have
commented upon returning from Chicago
claiming they had more interest than
expected from both Korean and Chinese
tanners, which only further confirmed in their
opinion there is still a decent amount of
underlying demand for hides.
In addition, buyers looking for bargains
found sellers with no patience for lower ideas,
encountering nothing but full-priced counters
from sellers. This led to the consensus of the
trade that the hides that were sold last week
traded at no worse than steady levels with
the week prior, while the majority of sales
reflect trading levels $1-$2 higher than their
last level, depending on the selection.
Trading levels herd were calling HNS as
high as $103 delivered, while BBS sold as
high as $102 delivered. HTS reached $99
delivered with unconfirmed rumours $100
delivered was paid, while BS sold at $99
delivered. Interest on HNH was reported at
$88 delivered and HBH at $86. Interest on
cows was decent as well as sales on HNDC
reflected $89 delivered, HNC at $81 delivered
and HBH at $68 delivered for northern
material.
Also worth noting are comments from
producers of wet-blue hides that they
continue to see decent inquiries / interest and
over the course of the past several weeks, it
is speculated that many producers have been
able to liquidate some of their accrued
production of wet-blue.
As to what we look for this week, Asian
tanners will return to their offices tomorrow
from their week-long absence and we suspect
tanners with aspirations of seeing lengthy
offer lists from sellers will be severely
disappointed.
Overall, sellers collectively as a group enjoy
a much stronger sold-forward position the
few weeks prior to the Shanghai Fair. This,
coupled with speculation we will see packers
slaughter fewer cattle as we move forward
due to declining margins in the packinghouse
and some of the lowest inventories of live
cattle we have seen in sixty years, will keep
offers limited in our opinion.
Meanwhile, with sellers buoyed with
confidence and popular opinion of sellers
that there is still underlying demand not
covered by Asian tanners, if prices are to
change this week it certainly appears from
our vantage point that there is more upside
potential to the market than prices moving
lower in the near-term.
Cattle markets USA - 08.10.13
Courtesy of AgCenter
T
he transition from a sufficient supply of
cattle to supplies that fall short of
slaughter capacities is expected late this
month. Beef plants will always attempt to
modify the slaughter numbers to match the
supplies but labour contracts assure plant
workers certain guaranteed hours. Futures
moved higher on Friday when packers had
to push cash prices higher late Friday
following lower prices in the north on
Thursday. The earlier purchases in the north
at $198 in the beef and $125 live were
replaced Friday in that region with sales at
$199-200 in the beef and up to $126.50 live.
Cattle owners will respond this week with
higher asking prices with some cattle priced
at $130. There may be some deferred
marketing encouraged by premium prices in
the forward month futures contracts.
Deciding when to market your cattle is not
simply picking a marketing slot that matches
the highest price in the futures market, it is
primarily driven by marketing weights and
cost of feed. It has been surprising during the
past year to see marketing weights reach all-
time highs despite record corn prices. During
that period, cattle feeders were fighting large
losses and weights were aided by Zilmax in
the feed ration. It would be impractical and
harmful to cattle performance to limit feed
cattle in an attempt to slow down gains and
reach a preferred marketing period. Likewise
it is impossible to speed up finishing to meet
a good market. Cattle are only capable of a
limited and somewhat defined genetic
potential.
This issue has particular relevance today as
December futures prices reach $132 or $6
over the current cash of $126. There will
definitely be some cattle planned for sale this
month that will be held a week or two to hit
what appears to be a better market. This will
not be disruptive or distorting to the market
because adding too much weight will cause
severe overweight penalties at the beef plant
and the movement of some cattle will simply
even out the marketing numbers. Feeders
will try to avoid the $150/head heavy weight
penalties but will always take advantage of
any price improvement opportunities.
Box prices moved modestly higher last
week. Those seeking market information on
beef prices returned to the yellow sheet - a
popular tracking source for dressed beef and
boxes. The loss of government price
reporting is also a reminder of the reliance
of formula sales on beef going to the retailer.
•
A surprising amount of demand for cowhides in the US, with sources
claiming they had more interest than expected from Korean and Chinese
tanners.
•
Producers have been able to liquidate some of their accrued production of
wet blue.
•
The falling US dollar is expected to be taken into account during discussions
at Lineapelle leather fair in Bologna, Italy, this week.
•
There are no slaughter statistics this week due to the US government
shutdown of non-essential offices.
leatherbiz weekly executive summary
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