US Perspective—21.02.17
21/02/2017
www.themaxfieldreport.com
Reports from the big packer trade claim that interest continued last week with more hides sold than the week before and this without much participation from Chinese tanners, as it appears the majority of hides sold this week were to tanners outside of China. Most business concluded was done at levels a dollar higher than the previous week, while for a few selections we saw price increases ranging from $2-$3, depending on the selection, as well as the packer.
Elsewhere, we continued to hear numerous reports of buyers continuing their efforts to purchase hides at levels lower than official asking prices. However, it appears packers continue to counter these bids at full asking prices and sources share there was a fair amount of business that was not concluded this week, which will likely encourage packers to keep their prices firm.
Reports from Asia claim that many Chinese tanners appeared uninterested in replenishing raw material supplies last week and many remained on the sidelines. Speculation by some members of the trade is that these tanners have not seen expected leather orders come to fruition, while other pundits point to the large purchases last fall, allowing tanners to avoid buying the winter hides most detest. In the meantime, sources report that tanners continue to press leather buyers for price increases, but are meeting a considerable amount of resistance, in spite of the fact, that prices of US big packer hides are running 12%-15% higher than a year ago.
Sources are also reporting that shoe-upper tanners for the domestic market appear as if they have more than ample leather orders, while others are quick to point out that obtaining an increase in leather prices remains difficult. Meanwhile, upholstery and auto leather tanners appear as if they have decent orders; however, they too are meeting substantial resistance to efforts to obtain higher leather prices.
Reports from the cowhide trade claim that interest is not as brisk as in the past few weeks, primarily due to a general lack of offers from most producers. Sources report that producers who offered this week had prices ideas $1-$2 higher than the last reported trading levels.
The number of heavyweight steer hides in the mix is dwindling, while sales of wet blue hides are still lacking. The decline of heavyweight steers is because of live cattle weights that are running 12-15 pounds lighter than a year ago, coupled with unseasonably warm weather engulfing many of the large cattle-producing areas of the US and cattle shedding their winter coats four or five weeks earlier than normal.
Sales of wet blue hides continue to lag the market and popular opinion of the trade is that there is a substantial overhang of unsold wet blue that has some producers pricing certain selections of wet blue at levels only $7-$8 over the prices being obtained for wet-salted hides. For the first seven weeks of 2017, we have seen a weekly average slaughter of roughly 575,000 animals. Popular opinion is that we are bluing approximately 175,000 hides per week, leaving 400,000 hides to be sold as wet-salted hides.
The good news for those selling wet-salted hides is that sales are averaging 380,000 hides and in our opinion this is why producers have been able to keep the wet-salted market firm. However, sales of wet blue hides are averaging 120,000 hides on a weekly basis, and this comes on the heels of sales the second half of last year that fell just short of 115,000 hides on a weekly basis.
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