US Perspective - 30.04.19
30/04/2019
www.themaxfieldreport.com
Last week in the big packer trade the offer lists of most packers were much more populated than the week prior. We saw packers lower their asking prices again, but this time we saw concession of $2-$3 on many selections. Even with this sizeable concession from packers, trading levels the week prior were still lower than their “official” asking prices. Most buyers are simply viewing asking prices as a “starting point” when negotiating prices.
The majority of sources we spoke to reported no real improvement in the number of bids versus the week prior. In addition, sources report few, if any, buyers with any real interest in voluminous type business; buyers do not need to buy volume at this time, only to see prices become substantially cheaper in a few weeks.
The number of hides changing hands last week was likely not much of an improvement compared to the week prior. Worth noting, last week’s USDA Export Report reported combined sales fell roughly 200,000 hides below the harvest, while last week we saw harvest levels set another high for the year at 643,000 head and we hope sales did not fall another 200,000 hides short.
Reports from the cowhide trade are very similar to those in the big packer trade. Overall, producers entered the week with offer lists that were much more populated, with most producers appearing as if they had a full complement of selections offered. As to shipping times, the majority, if not all selections offered, were listed for May shipment (prompt), while few, if any selections were offered for June shipment.
As to asking prices last week, sources report most producers lowered by roughly a dollar across the board. Worth noting, prices of some lower-grade selections of cowhides are now approaching levels where processors are bordering on breaking even. Moving forward, it will be interesting to see how long it is before we see some of these hide selections no longer available as we cannot imagine processors putting hides through their facility if they know it will cost them money.
Sellers are in control of the market and it appears as if there are more hides being offered around the globe than there is demand for; sellers have no real sense of urgency, especially considering the fact that leather orders continue to fall short of levels of a year ago for most tanners.
We understand sellers do not like to concede to lower prices; however, given the current situation, many do not appear as if they have much of a choice, especially until the industry starts to eliminate some of the lower-grade selections that are close to having little to no value. Of course, we understand taking hides out of production is not a popular subject; however, until we are able to bring supply and demand closer into balance, the only direction we see moving forward is lower.
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