US Perspective—04.08.15
04/08/2015
US Perspective—04.08.15
Courtesy of The Maxfield Report
www.themaxfieldreport.com
Packers and traders appeared a bit more confident entering the market last week. As a result, many sellers had a much firmer posture on prices and those buyers who had aspirations of buying hides at prices lower than the last reported trading levels found their ideas refused. In the meantime, sellers with intentions on pushing hide prices higher also found their fair share of resistance.
Overall, trading levels last week for the most part were in line with the end of the week prior. Worth noting, we have heard of a few isolated reports where some sellers were able to achieve some incremental increases of $0.50 to as much as a dollar higher than the last reported trading levels on limited volumes. As to the number of hides sold last week, the sentiment of the trade is that there were not as many hides sold last week as compared to the past two or three weeks and sellers very likely did not sell their production last week. In the meantime, we have a collection of sales to share that occurred over the course of last week led by reports of Jumbo BBS selling at levels of $80, while we had a couple of sales of BS with regular weigh packer material sold at $64 and Super-Jumbos sold at $74.
It certainly appears as if prices have stabilised, which considering all of the problems with non-performance during the rapid decline in prices is certainly being interpreted as a positive for those selling hides. We still have some very concerns about the lack of split sales and are of the opinion in order for hide prices to rebound that we will need to see some movement here.
Shipments have been falling short of the slaughter going on two months and until we start to see shipments exceed the slaughter on a consistent basis, we are not ready to jump on the bandwagon of those pontificating prices have bottomed and will now rise. The third leg of our argument is the fact that oil prices remain close to $55 per barrel and as a result synthetics are inexpensive. Our concern is that leather prices will need to come down even further if we are to see leather push synthetics out of the equation for the brands, which in turn will increase demand for leather. The final leg of our argument is a combination of the strong US dollar and the devaluation of the Chinese stock market. The stronger US dollar is not conducive to those exporting hides, while the severe devaluation of the stock market has driven many investors and tanners to the sidelines looking for a safe place to put their money. We cannot support the thoughts of some members of the trade that hide prices will rise as we move closer to the All China Leather Exhibition in Shanghai, August 31- September 2.
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