US Perspective—30.08.16
30/08/2016
www.themaxfieldreport.com
Last week was a sluggish week of trading for members of the big packer trade, as it appears that buyers and sellers were unable to agree on prices. Overall, the week began with the majority of packers not offering publicly and the few packers who made offers public eliminated offers of more popular selections, while raising their asking prices on the selection offered. Buyers offered a considerable amount of resistance to higher prices, and although there were some isolated instances of packers selling at levels a dollar higher than last week on minimal volumes, popular opinion is that the majority of trading last week was primarily at steady levels. In terms of the number of hides sold, it is unlikely that packers sold a week’s worth of production. We continue to hear reports that cattle coming to slaughter is weighing heavy, resulting in noticeably less production of regular-weight selections, while there is a substantial increase in the production of heavier-weight selections. As a result, there appears to be more than a few packers pressing for sales of Jumbo and Super-Jumbo weight steers, resulting in prices of these selections trading at levels only a few dollars higher than trading levels obtained for regular weight hides.
Elsewhere, pundits continue to be of the opinion there is a considerable amount of wet blue unsold in the US, supported by the lack of sales the past couple of weeks on the USDA Export Sales Report. In addition, the number of outstanding wet blue hides sold was at its lower level of the year last week.
Reports from the cowhide trade last week were similar to those in the big packer trade.
All eyes in the trade will be directed towards Shanghai and the All China Leather Exhibition that will take place this week, starting on Wednesday and running through Friday. It is likely that this fair will be well attended as it has established itself as one of the most important fairs of the year.
In the meantime, sellers enter this week claiming to possess improved sold-forward positions, and we look for producers to remain firm in their asking prices this week. Meanwhile, producers will need to be aware of slaughter levels that are running close to the highest levels of the year and this will not afford much of an opportunity for those selling hides to rest on their laurels.
It will be very interesting to hear the accounts of those who travelled to Asia prior to the fair in order to gauge the views of tanners about the leather business. It will also be interesting to hear accounts as to tanners’ raw material inventories, especially considering there are a number of unconfirmed rumours claiming there are definitely signs of leather orders improving for a number of them. Speculation continues that many of the brands are specking more leather into some of their articles for next season.
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