US Perspective - 11.11.14
11/11/2014
www.themaxfieldreport.com
Interest in big packer hides fizzled out towards the end of last week. Packers’ unwillingness to make any substantial concessions on trading levels, coupled with perceptions of tanners that the softer undertone of the market is likely to continue, led to a relatively quiet period. It is highly unlikely packers liquidated their slaughter last week, continuing a trend we have seen on a regular basis dating back to the beginning of July.
Packers have made their best effort to hold prices steady and have been doing their best to report trading as close to levels of the previous week. However, in reality we tend to agree with other members of the trade that packers appear reluctant to admit there are definitely some softer undertones to the market.
Meanwhile, sources overseas continue to report poor leather order situations for a number of tanners, while we are hearing a few more reports of tanners struggling to open letters of credit on time, even a couple of well-known larger tanners.
Elsewhere, prices of drop splits remain under pressure and all of this is stretching the cash flows of numerous tanners. In the meantime, tanners who have an interest in buying hides recognise the softer tone of the market and after watching prices ascend to new all-time record levels around the time of the All China Leather Exhibition in Shanghai in early September, are anxious for some price relief.
It is slowly appearing as if packers are resigning themselves to the fact that it is likely we are in midst of a correction on prices.
Slaughter levels have been running at levels 20% under those of a year ago for the past several months, but there has simply not been enough interest to allow producers to clear their productions.
This is leading to speculation that there are a number of sellers who have unsold product for prompt shipment. In addition, with prices down anywhere from $4-$6 per hide in the last month, and by as much as $10 since the Shanghai exhibition, we are hearing plenty of stories about tardy letter-of-credit openings and even some isolated claims of requests to “average down” older, more expensive sales.
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