US Perspective - 19.09.17
19/09/2017
www.themaxfieldreport.com
Reports from members of the big packer trade claim sellers and buyers were unable to come together on the market last week. Sources report packers that were looking to obtain higher prices encountered considerably more resistance to their quest than they expected. We are not aware of any instances of sales at higher prices.
Packers willing to sell at steady levels compared to the previous week report that they enjoyed some success. However, the total number of hides changing hides at steady prices was well short of last week’s slaughter, which was the largest of the year. Sources share that there were a decent number of attempts from tanners to bring prices $1-2 lower. Packers were reluctant to follow, however.
Overall, popular opinion of the trade is that the number of hides changing hides last week was likely well short of the slaughter, continuing the trend of the past few months. The consensus of the trade is that higher prices failed to come to fruition for packers. That being said, it appears the majority of hide trading took place at steady levels. It is widely agreed that packers could have sold a substantial number of hides had they been willing to accept prices $1-2 lower than current trading levels.
With regards to sales of wet blue, popular opinion of the trade is that decent sales in the last few weeks have assisted in liquidating the substantial amount of unsold material that had been hanging over the market for most of the summer. In fact, sources shared that offers were not as plentiful last week as a month ago, while there are claims that several producers appear to have adopted a firmer position on prices.
Reports from members of the US cowhide trade are similar to those from the big packer trade. Sources claim producers looking to improve on their last traded levels encountered substantially more resistance than they expected. Many producers seemed content to trade at steady levels if/when possible by the second half of last week.
Producers that held asking prices steady with the previous week report interest was lower than they expected. They shared that they could have sold a decent number of hides had they willing to consider trading prices $1-2 lower. For the most part, producers were unwilling to succumb to lower trading levels.
The consensus of the trade is that sales fell short of expectations and were likely below slaughter levels last week, especially in light of it being the largest slaughter of the year. The majority of hides sold last week seemed to trade at steady levels, but there were a few instances of sales at slightly lower levels.
As we set out on a new week of trading, we suspect the lack of sales last week will likely add a few more hides to offer lists that were already fairly populated. That being said, slaughter levels are not showing any signs of easing. Coupled with reports from Europe, Brazil and Australia that producers are pressing for sales, in many cases for prompt shipment, it seems as if those selling hides are in for another tough week of trading.
As we have mentioned a number of times, we believe the key to the market is demand for shoe leather. Until we see signs that the largest segment of the industry is coming back to normal levels, we continue to agree with many pundits that the upside potential of the market remains limited at best.
The good news is that the next few months are historically the busy season for the majority of tanners. The hope of those trying to market hides is that new leather orders will soon come to fruition, which in turn will encourage better demand from tanners.
In the meantime, the challenge for those selling hides is to find creative ways to liquidate their older, more expensive contracts. In addition, there are still a large number of requests from tanners in Asia to delay shipments. This is continuing to create a problem whereby we have shipments that continue to fall well short of the slaughter, creating a whole other set of challenges for producers.
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