US Perspective—14.07.09
14/07/2009
US PERSPECTIVE—14.07.09
The Jacobsen Commentary and Market Opinion
Courtesy of www.thejacobsen.com
There was a decent volume of trading reported at the end of last week at levels fairly consistent with the rest of the week. The market definitely looked stronger last week while the trade is settling into the rhythm of July. It would appear that there is a good demand for leather from the auto industry. Initially this could be confusing as auto sales and the auto industry aren’t exactly booming right now.
Upon further thought it is likely, or plausible, that the automakers had run their pipelines down without replenishing their leather needs in an effort to keep costs off the balance sheet while going through financial inspection or scrutiny or bankruptcy or whatever it may have been. The point is, they are ready to buy again and apparently showing a lot of interest. This quick demand is part of the reason for the current price boost. However, it remains to be seen if this is a sustainable price level or just a quick spike that reflects an urgent need to fill empty reservoirs.
If shrinking inventories are the case with the supply side, the industry could see prices stabilise or increase for the next few weeks.
Last week started slowly with a lot of big packer reps, traders and tanners filtering in from the holiday weekend of July 4, or out on vacation for the rest of the week. Early trading that was reported was softer on BS and slightly higher on HBH. A weaker slaughter week should buoy prices as well by continuing to limit the supply in the market.
The outside markets took a hit today as crude oil and the other commodity markets closed lower. The equity markets also took a hit with the DJIA, NASDAQ and the S&P indices all closing lower amid fears of lower earnings and further economic woes.
Anyone looking at the Jacobsen Price Index will see a gradual progression in price over the last couple of months. How this month begins and progresses will be key in seeing if the market is experiencing a true recovery or the price increases of the past months are unsustainable. Both sides of the argument were debated hotly throughout June.
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