US Perspective—08.04.14
08/04/2014
Last week the trade gathered in Hong Kong for the APLF exhibition and according to the members of the trade we had the opportunity to speak to, it appears most seemed pleased with the overall results. Of course, tanners in general had their fair share of the normal complaints that are typically associated with a market that is hovering around all-time record price levels; however, one complaint that we did not hear was that the leather business in general was poor.
Those who sell hides seemed rather pleased with current trading levels, while boasting about strong sold-forward positions that have been obviously bolstered by unseasonably low slaughter levels. Overall, the majority of sellers we spoke to said buyers, in general, appeared reluctant to buy hides in volume during the trip; however, when all of the sales were totalled for the week, it appears sellers were able to come close to selling their weekly production.
In terms of prices, for the most part, the trade was calling prices no worse than steady, while there were a few isolated selections, especially cowhides selections, for which sellers appeared able to register some increases. Popular opinion was that sellers were likely able to liquidate their slaughter last week and that it is very unlikely we will see any weakness in price in the near term.
As to what we expect for this week, we do not see any reason for those selling hides to change their approach from the past several weeks. Collectively, those selling hides possess strong sold-forward positions as they have no doubt benefited from low slaughter levels. However, several pundits are of the opinion that slaughter levels are poised to increase in the coming weeks and that we are likely to see larger slaughter numbers starting towards the end of April, with higher levels each month as we move through June.
What will be interesting to see is how live cattle numbers start lining up after the mid-point of the year as there are several pundits in the live cattle trade who are of the opinion we will again see live cattle numbers tighten in the third quarter, so we could see slaughter numbers return to unseasonably low numbers again.
We remain of the opinion that the upside potential for hide prices is limited; however, we do not see prices easing in the immediate near-term as there are simply too many people looking for too few hides.
Share this story:
