US Perspective—29.11.16
29/11/2016
www.themaxfieldreport.com
For the most part offer lists were in line with the week prior with the exception of a minor, downward price adjustment on heavier-weight steer selections and a couple of hide selections that are not as popular with tanners.
Overall, the majority of sources we spoke to claim that last week was a lost week of trading, especially with most producers choosing to follow their usual routine and not offer hides until Tuesday afternoon and the holiday on Thursday and most members of the US trade also taking Friday off as well. There was a modest number of buyers attempting to buy hides last week; however, with the perception of most buyers that producers were in need of sales, most bids were at levels below the official asking prices of packers.
There were plenty of rumours claiming that traders appeared to be a bit more willing to negotiate prices last week, with some packers a little more willing to listen to ideas from buyers towards the end of last week on heavier-weight steer hides and BRS or CBS selections.
Elsewhere, reports from the cowhide trade are similar to those in the big packer trade, as producers did not appear as if they were in any hurry to offer last week, opting to wait to offer until Tuesday afternoon. According to sources, there was a modest number of buyers willing to share ideas. However, with most producers attempting to angle for no worse than steady prices and many buyers appearing as if they were looking to test the will of sellers with lower ideas, popular opinion is that not many hides changed hands last week. Producers of better-quality HNDC remain very well sold, while there is speculation building that some producers of HNC and HBC may not have as many hides sold as they are advertising. In addition, there are lots of rumblings from other parts of the world claiming that there is interest in cowhides, but the majority of buyers appear as if they are targeting lower prices.
The next three or four weeks set up an interesting chess match between buyers and sellers, especially because the majority of sellers are looking to conclude business to ship during the time most tanners in Asia will be closed for the Chinese New Year celebrations. In the meantime, sellers will certainly be keeping an eye on the slaughter as we move forward, as packers are registering some of their largest profits in quite some time and will want to avoid falling under the weight of their own inventory.
Meanwhile, the “wild card” in the equation in our opinion is leather business for the first half of 2017. We have heard from some sources claiming that some tanners have decent orders, while we have heard from others that they have not seen any improvement in business. We tend to believe that the majority of tanners have covered the essential needs leading up to the Chinese New Year holiday at the end of January and we will be very interested to see what demand is like at the end of that holiday. We are cautiously optimistic that leather demand for 2017 will be better than in 2016.
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