US Perspective—01.09.15
02/09/2015
Courtesy of The Maxfield Report
www.themaxfieldreport.com
The first days of the ACLE in Shanghai is in the books and the consensus of the trade is that foot traffic the first day of the fair was better than expected, while it appeared the vast majority of buyers appeared more interested in kicking tyres and acquiring offer lists as opposed to buying hides. Those selling big packers hides continue to offer only a limited number of selections, while for the most part it appears most sellers have opted to keep asking prices steady with last week. Reports from sellers who travelled in Asia prior to the fair met with much more resistance than anticipated and this resulted in sellers not selling as many hides as they were anticipating. Overall, trading levels of big packer hides are steady; however, there is a slowly increasing number of people in the trade questioning if sellers are selling enough hides each week to justify increases.
Members of the cowhide trade are a bit more subdued as a number of travellers shared that their trips prior to the fair were disappointing. Overall, sellers share that attempts to obtain steady money on plump cows is a difficult task. Demand for HND is not nearly as brisk, while there are rumours some producers are not as well sold forward as they have been advertising. Elsewhere, slaughter levels continue below seasonal levels for cows and steers. Pundits are of the opinion that we are likely to see a few more in September as available supplies of live cattle slightly improved, while packers’ margins are back into the black.
As to what we expect for the remainder of the week, currently there are some very divided opinions about the future direction of the market, as both sides appear to have some strong talking points. In addition, what we find interesting is when speaking with various tanners at the fair, we did not encounter any substantial complaints about the current price of hides; however, we heard our fair share of complaints about split prices, requests for lower leather prices and rising costs of pollution controls as reasons why their profit margins remain under pressure. There is continued insistence by those selling US big packer hides that packers are not shipping as many hides as requested; however, we suspect there is more behind these stories than packers simply being sold too far forward.
Numerous members of the trade who travelled prior to the show have said that many of their customers had larger than expected inventories of raw hides as well as finished leather that they are unable to ship. There is a fair number of people insisting that we will see prices correct as we move through September. We believe that although prices are steady, we are of the opinion that the market appears very thinly traded in the last ten days to two weeks and we are wondering aloud if we might be bumping up against the top-end of the trading range.
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