US Perspective - 17.10.17
17/10/2017
www.themaxfieldreport.com
Members of the big packer trade report last week started with packers offering at steady levels to the week before, both in terms of the number of selections and asking prices. Packers might have had a few more hides for sale than they were willing to admit, leading to thoughts that buyers might be able to negotiate prices.
However, interest at the start of the week exceeded expectations, with sources sharing they enjoyed the most bids they had seen in several months. Bids ranged from slightly lower than asking prices to several dollars under asking prices, while packers were quick to dismiss bids deemed too aggressive.
As a result, there were a decent number of hides exchanging hands, with most hides selling at steady levels, while there were a few isolated selections achieving incremental price increases.
Overall, last week was a successful week of sales for packers and it is thought they sold a week’s worth of production.
However, even more important might be the business NOT concluded by packers, as sources share there was a decent amount of business not concluded, so we should see some decent follow-up interest this week.
Demand for wet blue hides remains fuelled by Italian tanners who find themselves forced to buy wet blue hides due to effluent issues. As a result, producers of wet-blue have seen a steady decline in unsold product and “stories” of sales of wet-blue hides at levels less than $10 higher than wet-salted hides appear to have dwindled if not vanished.
Members of the cowhide trade report a different situation. Offers at the start of the week were unchanged, but sellers had more than their fair share of hides to sell and started the week taking aim at lower prices. By the second half of the week there were more than a couple of producers pushing hard for bids.
Most producers made their best attempt to hold prices steady, while sales appeared steady at $0.50-$1.00 lower depending on the selection and the producer, and it is unlikely producers sold a week’s worth of production.
THE LOOK AHEAD
Although it might be premature, we might see some packers raise prices on some of their more popular selections. This, on the heels of what many believe was a decent week of sales, fuels opinions that the market is firming. Lending support to this argument are claims that many Chinese tanners are buying more hides than they have orders, as sources believe these “savvy” tanners are attempting to secure as many end-of-the-summer hides as they can, especially at current trading levels.
The challenge facing those selling hides is not to be too greedy, as harvest levels are forecasted to continue at unseasonably high levels. This is despite the fact we have seen the last couple of weeks come in at lower numbers, as packers attempt to balance live cattle prices against beef demand to protect their profit margins.
It comes down to demand and as of this writing, we are not hearing of any major change in the use of leather in any shoe designs, changes in longer boots for ladies, or larger handbags coming back in style.
Another challenge facing the market is that automotive leather, which had been going gangbusters for several years, is exhibiting signs of slowing and is the reason sellers strive for higher prices; however, maintaining one’s sold-forward position appears more important than higher prices for the interim.
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