US Perspective - 09.07.19
09/07/2019
www.themaxfieldreport.com
Last week saw packers attempting to deal with a holiday-shortened week of trading as the Independence Holiday fell on Thursday. We are aware of several members of the trade who took advantage of the holiday to enjoy a long weekend. Overall, packers entered the week touting much stronger sold-forward positions and backed these claims up with offer lists that were not nearly as populated as those of a few weeks ago, while the selections offered were reported to be pushing shipment in the second half August and into September.
Packers were not bashful in their asking prices, with most raising prices roughly a dollar across the board on the selections they were offering. We even heard of a couple of packers pushing for price increases of as much as $2 per hide on a couple of selections they were offering last week.
As to interest, it appeared that the firmer asking prices of packers discouraged much interest in the first half of the week, which was expected by most pundits. However, we understand that by the second half of the week, a handful of traders and some tanners started to show interest and there were plenty of claims from packers of achieving their full asking price. As to the number of hides changing hands last week, we are not hearing any members of the trade claiming numbers were larger than the past couple of weeks. It will certainly be interesting to see Thursday’s USDA Export Sales Report when it is released.
Members of the cowhide trade claim that offers this past week did not reflect much change from the past several weeks. Worth noting, even one of the large processors who had raised asking prices by as much as $3-$4 per hide on some selections in the past couple of weeks had supposedly readjusted asking prices, bringing them back closer to those of competitors.
After a somewhat sluggish start to the week, we hear from several sources that interest improved as the week progressed and by the end of the week, several producers were laying claims to enjoying better-than-expected sales and certainly an improvement versus the past two or three weeks.
As a result, many people are starting to formulate the opinion that perhaps lower-grade cowhides have reached bottom and with such low prices and some of the best hides of the year, many tanners have decided to enter the market. Whether or not we will see prices move higher in the coming weeks is still being debated, but there appears to be a very strong argument that perhaps the lows for the year have been put in and we will have to see how this plays out.
The question being asked by various pundits is if we have seen an improvement in leather orders, or if we are simply seeing some savvy buyers loading up on some of the best hides of the year at very affordable prices. We are able to see both sides of the argument. We do not question that the market is on firm ground. However, we continue to struggle to see any substantial improvement in the overall fundamentals of the market, leaving us to question how much upside there really is in this market, especially considering the number of hides that are unsold globally and that most of Europe is out enjoying the annual summer holidays.
In addition, we are likely to see harvest levels in the US that we have not seen in a long time in July and August and we remain of the opinion that those selling hides need to be careful not to kill the momentum that appears to have swung into their favour.
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