US Perspective - 19.08.14
19/08/2014
www.themaxfieldreport.com
Last week saw buyers continue to struggle with the firm tone of the market; while offers from packers last week were minimal at best and void of many tanners’ favorite selections. Overall, popular opinion of the trade is that trading for the most part was isolated and the number of hides sold limited as buyers continue to “pick around the edges”.
In the meantime, the sentiment of the trade is that like the past few weeks, the majority of the interest continues to be led by traders. Meanwhile, in terms of trading levels, for the most part prices remain no worse than steady, while we are aware of a few isolated incidents where sellers were able to push for higher prices on some of tanners’ favourite selections.
As far as trading levels heard last week, we understand HNS sold at levels as high as $119 delivered, while sales on BBS were able to achieve levels a dollar less. Meanwhile, trading levels on HTS ranged from $114-$116 depending on weight average, while sales on BS were at almost equivalent levels. In the meantime, we continue to hear that producers of wet blue continue to press for sales on certain selections and the consensus of the trade is that these are the only hides on which interested buyers may have some room to negotiate prices.
Reports from members of the cowhide trade are calling things a two-tiered market. According to sources, those looking to sell lighter weight material (HNC or HBC weighing 48-52 pounds) continue to struggle to line up enough buyers at steady levels. Meanwhile, producers able to offer HNDC and heavier-weight cows in the range of 58-62 pounds and higher, are finding buyers willing to pay a substantial premium.
As to business last week, popular opinion of the trade is that sales for the most part were lacklustre, like they have been for the past several weeks; however, with slaughter levels continuing to run close to 20% under levels of a year ago, producers do not appear as if they are feeling any pressure to sell.
Elsewhere, reports from Asia claim that tanners remain frustrated by the firm tone of the market and with many sellers indicting that they look for prices to move higher, tanners are struggling to understand this mentality, especially with the lack of sales and shipments over the course of the past month-and-a-half.
In the meantime, several tanners have commented that their current backorder of leather orders are not quite as robust as they were last year. In addition, tanners are complaining strongly about the significant reduction in the price of splits, which is certainly affecting their bottom line, while tanners have little choice but to once again lobby leather buyers for additional prices increases on new business.
As to what we expect for this week, we suspect offers will be even more limited than last week, especially with several members of the US trade already travelling in Asia and many more departing as the week progresses. In the meantime, we believe there are tanners who are hopeful their many visitors will have some “special offers” when they visit; however, given the record low slaughter and strong sold positions of producers, tanners looking for such bargains will likely be disappointed.
What will be interesting to monitor in our opinion is the activity of traders. In our opinion, over the course of the past several weeks, traders have been very active in buying hides for what we believe is an ownership position and this could result in prices from traders perhaps being slightly cheaper than the prices packers will be asking.
At the end of the day, it certainly appears from our vantage point that the market is poised to stay no worse than steady leading up the All China Leather Exhibition; however, we would not be surprised if we did not see some panicked buying and sellers able to register sales at levels higher than their last reported levels.
Share this story:
