US Perspective - 19.03.19
19/03/2019
www.themaxfieldreport.com
Big packer hides were not easily accessible to the public last week as all the packers had representatives at APLF in Hong Kong. They opted to allow these representatives to share their offers with the customers they were meeting with. The members of the trade who saw offers from packers did not see any substantial changes in offer lists. This comes as a bit of a surprise as popular opinion was that the general lack of sales in the previous few weeks would lead to an increase in offers from packers. Packers continued to try to hold prices as close to steady as possible.
As to interest last week, buyers did not show any sense of urgency. Buyers willing to share their price ideas looked to buy at levels lower than the last reported trading level, with packers reluctant to negotiate. There were rumours that one packer concluded business at prices well below the last published trading levels. They were accused of selling HTS at $35-36 and BRS at levels of $27. We are still trying to confirm if this was actually the case.
Last week’s sales likely fell short of the harvest. It is very likely they will not reflect much of an improvement compared to the previous couple of weeks when USDA releases its weekly Export Sales Report in Thursday. One point worth mentioning is that there was talk that last week’s report appeared somewhat underreported, with members of the trade suggesting the low sales were due to the number of people who were traveling. We may see some of those sales reported in this week’s report.
Shipment numbers have been decent in the past three weeks. This, coupled with lacklustre sales, has brought outstanding sales of wet-salted hides to one of the lowest numbers in recent memory. This supports the argument that a number of producers need to conclude some business as they do not possess the sold forward position they are advertising.
As to trading, we have a handful of sales reported from over the weekend: BBS at $41, CBS at $32 and HNS at $45.
Reports from the cowhide trade mirror those in the big packer trade. Many producers who had people travelling last week opted to let them share offer lists with potential buyers. Offers showed no substantial change compared to the previous few weeks, with producers trying to hold prices as close to steady as possible.
Interest last week was nothing to write home about. The majority of buyers willing to share their price ideas were looking for prices lower than asking prices. Producers appeared fixated on holding prices as close to steady as possible, leading to thoughts it is highly unlikely they cleared their production. We will likely see a few more hides for sale this week as the harvest remains at unseasonably high levels.
We were able to round up a couple of sales from the weekend. HDNC continue to remain in demand, allowing producers to sell at $25. Trading on HNC checks in at $18.
The look ahead
The majority of the trade has returned from APLF and as we set out on another week of trading we suspect we will continue to see producers looking to hold prices as close to steady as possible. Considering the lack of sales we have seen in the past few weeks, we would be surprised if there are not a few more producers willing to listen to the lower ideas of buyers, especially considering we suspect several producers simply do not possess the sold forward positions they have been advertising.
Meanwhile, we are aware of reports claiming that numerous tanners appear to be in need of raw material. The number one complaint we continued to hear at APLF was about the lack of overall leather business. There were also complaints about synthetic materials producers’ continued use of the word ‘leather’ to describe their products.
It is our opinion that if leather is going to succeed and move forward, there is a need for the industry to go on the offensive, compared to our previous posture as defensive. We need to insist on greater transparency, while making a concerted effort to educate consumers about the advantages of leather.
In addition, we as an industry need to promote leather and the environmental practices our members follow. We should start addressing our synthetic competitors and question their practices in general. We should also start litigation against groups that incorrectly use the term ‘leather’ and take steps to ensure any product labelled as leather is indeed from an animal and is not a man-made substrate concocted in a laboratory.
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