US Perspective—21.01.20
21/01/2020
www.themaxfieldreport.com
Last week’s business concluded at no worse than steady levels, according to trade opinion, with slight “rumblings” towards the end of the week due to some isolated business concluded around 50 cents lower than the last trade levels. It was also highly unlikely packers sold all their production, which will certainly make for some interesting offer lists this week.
Elsewhere, overseas reports claimed interest from tanners in Asia slowed considerably last week, as a number of tanners closed early for the Lunar New Year. Additionally, several more closed their facilities over the weekend and the majority of tanners working this week are set to close on Thursday.
Few sellers claimed to enjoy a busy week of bidding last week and several sources shared their disappointment with the amount of interest they saw. There were reports that a handful of tanners, who recognised the lack of bids, began bidding prices $5 to $8 lower in an attempt to see if they could catch sellers in a moment of weakness and buy at substantially lower levels. However, according to sellers, it was interesting that many of the tanners looking to buy appeared to be more focused on shipping times as opposed to prices, and many enquired about the possibility of prompt shipment.
Reports from the upholstery trade were mixed regarding leather business for tanners, as a number of automotive tanners reported requirements from automakers were not exhibiting any substantial improvement from levels seen in the fourth quarter of last year. However, some isolated rumours claimed that a couple of automotive tanners were more active last week which, in our opinion, is worth keeping an eye on.
Furniture business appeared to remain decent; however, many tanners were quick to point out that making a profit was not easy. In spite of what appeared to be decent business, most tanners had reservations talking about hides for March shipment or later, as it is the time of the year where most start to see their business slow. That said, with prices from producers fully steady and questions about whether leather orders will remain decent, most tanners are unwilling to gamble at the moment.
As it pertains to side-leather business, most shoe and handbag tanners saw an improvement in orders during the second half of last year, compared to the first half of this year. In the meantime, a number of tanners in the Fujian and Wenzhou areas have departed for their Lunar New Year, claiming to possess an adequate number of hides. In addition, sources reported that many export tanners servicing major brands appeared to enjoy decent demand from shoe and handbag retailers.
Last week’s harvest came in slightly lower than expected due to a winter storm that impacted harvest numbers in the Midwest. Thoughts for this week’s harvest are that we will continue to see slightly higher numbers than last year, as there still appears to be plenty of cattle standing, supported by reports that weight averages continue to track at higher levels than last year.
Regarding offers this week, it will certainly be interesting to see if they are a bit more populated due to the recent lack of sales alongside last week’s results in offer lists. However, considering the number of tanners already departed for their Lunar Holidays and the few tanners who will likely be departing by Thursday, it would not be prudent for producers to increase the number of hides they want to sell over the next two weeks.
That said, with two weeks of poor sales behind us and two weeks of what should be poor sales in front of us, we can understand why tanners believe that we will likely see producers have to trade lower. However, producers continue to insist they are well sold, but there is no question that these next two weeks will test those claims.
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