US Perspective—03.03.15
03/03/2015
www.themaxfieldreport.com
Last week, things got off to a relatively slow start, as most tanners did not return to their offices until the middle of the week. Offers from packers were mixed, with reports claiming some only had a few selections of hides for sale, while other packers had a full complement of selections for sale. The common theme among offers was that none of the packers appeared willing to offer any selection in any kind of volume. With regard to asking prices, it appears most were unchanged from levels from the week prior.
Upon tanners’ return in the middle of the week, the majority had ideas that they would be able to buy hides more cheaply than before the holiday. That said, producers were pleasantly surprised by the volume of enquiries and interest they saw. Buyers received a bit of a surprise when they found out that packers did not intend to concede to their lower price ideas and that packers were not aggressively seeking prompt sales.
This could be attributed to the fact that several of the packers did some of this business over the previous couple of weeks. In addition, record low harvest levels that have been running at roughly 50,000 head under levels of a year ago for the last two or three weeks, coupled with the fact that the west coast labour situation has settled down, have given packers the confidence to hold onto their price ideas.
We have heard that buyers of heavier-weight hides still appear to have some room to negotiate price on jumbos and super-jumbos as it appears some producers still have more than ample offers.
As to what we expect for this week, we tend to believe the table is set for firm prices because of the reduction in the harvest, the fact March is traditionally the last month of tanners’ busy season, and with the APLF exhibition only four weeks away.
The question that remains unanswered is how leather orders are setting up for the second quarter of 2015 compared to the first. Tanners are struggling with leather buyers who are pressing for concessions on new business, while split prices are close to 35%-40% lower than levels of a year ago. All of this, coupled with the fact members of the trade will be departing for Asia in the middle of the month should make for a very interesting month of March.
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