US Perspective—27.10.20
Courtesy of The Maxfield Report
www.themaxfieldreport.com
Last week in the big packer trade offer lists from packers were smaller than anticipated and for the selections on the lists, packers seeking increases of roughly a dollar higher than the week prior.
Popular opinion is that we saw a decent number of bids last week, with a decent number of hides changing hands.
Reports from members of the cowhide trade claim last week’s offer lists were a duplicate of the week prior, while asking prices were reported a dollar higher. There were not nearly as many hides changing hands last week.
It certainly appears as if we have a two-tiered market developing. Big packer hides continue to be in demand leaving many pundits to conclude that there is still some upside potential for prices. Meanwhile, sellers of cowhides were not as fortunate, encountering their fair share of resistance to higher prices.
The price of big packer hides has almost doubled since the low point of the year in April. And since then, the price of cowhides has gone up by almost 170%. On a historical basis hide prices are still well below the levels of a year ago. Prices of big packer hides are $6 lower than two years ago and $23 down from levels of three years ago. This is why there are a number of pundits insisting that prices in general still have some appreciable upside.
We need to recognise that harvest levels in the US are a million animals lower than a year ago, while numbers in Australia are off more than 2 million head and numbers in Brazil are off close to 2 million animals as well.
There is no question that the leather business has improved compared to six months ago and with more than 5 million animals out of the equation owing to problems with covid-19 at packing houses, prices have pushed higher. The question moving forward is if there is enough demand to sustain this, especially with a resurgence of covid-19.
