US Perspective—04.09.18
04/09/2018
www.themaxfieldreport.com
The All China Leather Exhibition in Shanghai is now a memory. Reports from several sources claim, as expected, that day 3 was relatively uneventful, as well as poorly attended, as the majority of halls had only a handful of people present. In fact, sources share by the time lunchtime rolled around, many exhibitors were already starting the task of dismantling their exhibits.
Identifying members of the trade, regardless of their origin, who are not departing for home disappointed with the results of the show is difficult, not to mention feeling pessimistic as to the state of the industry and leather orders for the coming months. It is clear there is not enough leather business to absorb all of the hides being produced on a weekly basis around the globe.
As to interest this past week, the sentiment of the trade is that premium hides such as Heavy Native Dairy Steers and Heavy Native steers still appear as if they have enough demand to allow producers to hold prices steady, while we also hear that interest on Heavy Native Dairy Cows appears adequate to allow producers to hold these steady as well.
In the meantime, we started to hear of some sales at incrementally lower levels on several big packer selections, as it appears sellers finally resigned themselves to the fact that there had not been enough hides sold the past three or four weeks. They made the decision to start negotiating with prospective buyers, instead of countering business at full asking prices. In addition, we have heard from several sources that there appears to be some renewed interest from buyers in heifer hides; however, sources share there were not many of these selections offered last week.
Reports from the cowhide trade are similar to those in the big packer trade. Members of the trade in attendance at the ACLE said there were a number of producers in attendance who had more hides for sale than they were willing to admit, while there also appeared to be a number of European producers as well as wet-blue producers from Brazil also anxious to conclude some voluminous type sales.
In other news, the consensus among pundits is that producers of lower-grade material do not appear as if they enjoyed much interest this week, especially on HNC and HBC. Worth noting, because of the lack of interest and the fact there were a number of producers from around the globe with more than ample supplies of competing material for sale, it appears US producers became much more aggressive at the end of last week with a number of sellers looking to conclude voluminous business, especially on HBC.
Over the course of the show, we continued to hear reports that the number of bids was limited, while price ideas were at least a couple of dollars under the asking prices of producers, and in many cases, much lower than this. For the first day-and-a-half of the show, producers made their best efforts to convey a firm tone to the market; however, by afternoon of day two, we were starting to hear reports that producers were willing to negotiate prices.
The buzz around the show on day three was the claim that Brazil is moving forward with plans to abolish its export tax on wet blue hides (currently 9%). We have it on good authority that the paperwork is in place and it is a matter of securing the appropriate signatures. Meanwhile, there were plenty of reports during the course of the show that a number of wet blue producers in Brazil were aggressively looking to book some voluminous type business and wonder if the above wasn’t the catalyst to encourage US cowhide producers to pull the trigger on lower-priced sales late this week.
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