US Perspective—28.03.17
28/03/2017
www.themaxfieldreport.com
Last week in the big packer trade, as expected, offers were limited due to a number of packers who were busy travelling Asia visiting various customers prior to the APLF exhibition (March 29-31).
Sources overseas report that offer lists, seen by packers who were travelling, started the week in line with the week prior; however, by the middle of the week, packers became much more aggressive. According to sources, many of the packers were countering lower ideas by tanners at roughly a dollar under their official asking prices. However, towards the end of last week, rumours intensified claiming several of the packers were reported to be countering ideas from tanners as much as $2 below asking prices, depending on the packer and the selection.
As to sales last week, considering the number of people travelling, it is difficult to get an accurate gauge as to how many hides changed hands last week. However, it is worth noting that usually when packers start to “consider” accepting lower prices, the usual modus operandi is to try to sell quantity at lower levels. That said, we suspect a decent number of sales were concluded directly to tanners last week, especially considering that sales of wet-salted hides have exceeded 250,000 hides only once in the in the last eight weeks.
Reports from Asia claim a number of shoe tanners continue to complain of poorer than expected leather orders, compounded by leather prices that continue to run below levels of a year ago. Sources report price ideas from most tanners running at levels $3-$4 lower than official asking prices. As of this writing, it appears a majority of tanners are assuming a “take it or leave it” type of mentality when bidding, while sources report packers have a mixed reaction to bids, with some tying to counter in an effort to conclude business while other packers are looking to play a waiting game.
Reports from the cowhide trade claim that last week there were only a limited number of offers, the result of a number of producers having representatives travelling in Asia and the majority of producers laying claims to strong sold-forward positions. Overall, sources share that ideas from tanners last week, like those seen in the big packer market, were $2-$3 lower than last traded levels of producers and for the most part sellers were unwilling to follow. That said, there is some sentiment building that perhaps cowhide prices have peaked; however, with the events surrounding the Brazilian meat crisis still unfolding, we can follow argument by sellers that they may not have to succumb to lower levels in the interim.
We look for producers to utilise the news coming out of Brazil to their advantage, as speculation is that we will see numbers drop by a third at least. It will certainly be interesting to hear the stories of those who have travelled in Asia prior to the APLF fair, and their accounts as to the inventory of tanners.
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