US Perspective—06.08.16
06/09/2016
www.themaxfieldreport.com
Opinions on how the All China Leather Exhibition went appear mixed. We have heard comments from some who claim they regretted coming, while other members of the trade reported they were pleased with the outcome of the show.
It was evident that there were not nearly as many exhibitors this year compared to past years; several sources reported that exhibition halls 1 and 2 were portioned off. Hallways were much wider than in previous years, perhaps a “ploy” by organisers to try to camouflage the fact there were fewer exhibits.
Possible reasons for the lacklustre numbers ranged from leather business for most tanners being not nearly as busy as a year ago to the fact that split business remains horrible and many members of the split trade opted to stay home rather than incur the expense to come to the ACLE.
Reports from others claim many Chinese tanners visited the show for one day only.
As to business concluded at the show, numerous reports claim there was a considerable number of bids last week from tanners at levels $2-$3 under the last reported trading levels, which did not find a lot of favour with packers. A majority of offers from packers ranged from steady to levels a dollar higher (depending on the packer and selections) than the last reported trading levels, with packers experiencing a fair amount of resistance to efforts to raise prices.
The consensus of the trade is that it was not a successful week of trading for packers in terms of the number of hides sold. In terms of trading levels, prices for the most part were steady with the previous week, while heifer selections reflected some noticeable improvement. Packers appear pleased by the fact a number of buyers who started the week with lower ideas were supposedly willing to improve their prices.
It still appears as if packers were not able to sell enough of their problematic selections (Jumbos, Super-Jumbos and wet blue) and this overhang of unsold material is likely to present a challenge to packers looking to raise prices. The good news for packers is that this week is a holiday-shortened week of slaughter and this should offer producers approximately 100,000 fewer hides to sell.
That said, forecasts by pundits are that with cheap corn prices, ample supplies of live cattle available for slaughter and packer margins running at their highest levels of the year, we are likely to see slaughter levels return to levels hovering around the 600,000 head level. That is why if we were producers, our objective would be to keep selling into the market, especially with a lack of clarity as to what kind of an improvement we will see in demand the last third of the year.
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