US Perspective - 29.10.19
29/10/2019
www.themaxfieldreport.com
Packers entered last week buoyed with a noticeable improvement in confidence, based on decent sales over the course of the past several weeks. As a result, offer lists were mixed, as some of the packers opted to remove selections, while trying to raise prices on a few of their popular selections.
Other packers left their lists and asking prices unchanged, offering what appeared to be a full complement of selections.
As expected, bids to stop the week were not plentiful in volume, while most buyers willing to share their price ideas were bidding at levels $1-$2 lower than the last reported trading levels. That said, buyers quickly discovered packers had no patience for lower price ideas, refusing to negotiate.
In regards to business last week, sources report there were a decent number of bids; however, it did not appear as if there were as many as the week prior. We understand there were a fair number of buyers who improved their price ideas and a decent number of hides were sold.
It is worth noting there were a noticeable number of buyers who refused to improve their price ideas and opted to wait until this week, leading to thoughts that we should see a modest amount of interest this week.
We heard comments from a number of sellers who reported it was much easier to sell at steady levels last week compared to a couple of weeks ago, while we were also hearing that attempts by sellers to raise prices, even on some of the more popular selections, were met with a considerable amount of resistance from buyers.
Members of the cowhide trade reported that producers entered last week more confidently. This newfound confidence was likely the result of producers enjoying a substantial improvement in interest the last week to 10 days, allowing many producers to liquidate some of their building supplies of unsold lower grade selections.
Most producers opted to leave asking prices unchanged with the past few weeks, both in terms of the selections offered and asking prices. That said, the most noticeable difference was the lack of offers of hides for prompt shipment.
With regards to interest, things got off to somewhat of a slower start, with buyers willing to share their price ideas, bidding under the last reported trading levels, attempting to test the wills of sellers.
It appears producers appeared to have much firmer postures than many pundits anticipated, and were firmly countering bidders at full asking prices.
The number of bids got off to their usual slow start; however, by the middle of the week, the number of bids improved, although not nearly as plentiful as the week prior.
Overall, last week was a successful week for sellers, as a consensus the bottom of the market had occurred, and although as of this writing we are not aware of any members of the trade pontificating the likelihood of higher prices, it appears buyers still looking for bargains may be disappointed.
THE LOOK AHEAD
It appears that producers possess one of their strongest sold positions they have had in quite some time. This is leading to thoughts that some producers might attempt to raise asking prices, while buyers looking for bargains and bidding lower than the last traded levels are likely to be disappointed.
Something else we will be monitoring this week is to see how much interest we see from Chinese tanners, especially knowing the December 15 deadline when the US intends to raise tariffs is technically still “on the table”. Of course, hides bought last week and especially this week moving forward have little to no chance of arriving before the December 15 and it will be interesting to see if tanners use the possibility of higher tariffs as to why they must buy hides cheaper and it will also be interesting to see if sellers are willing to listen to these arguments.
In the meantime, interest from tanners overseas has been exceeding expectations of pundits and early thoughts about this week’s USDA Export Report is we are likely to see yet another decent week of sales and if this should come to fruition, it will be nearly two consecutive months we have seen decent interest. This leads us to ask, how many consecutive weeks of decent interest must we see before we can declare that leather business just might be better than the reports we have been hearing.
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