Total Shoe Concept is proud to announce our partnership with Hidenet Publications. Since 1975, their expert analysis and accurate market reports have given leather and hide industry professionals big and small the daily insights they need to stay ahead. This week we are sharing Don’s Market Observation from the 4/28 US Weekly Report:
Do Numbers Matter?
What do they mean? Markets are typically based on supply and demand. In the case of the American hide market for the past 30-45 days, supply has been greater than demand as producer forward sales positions have steadily eroded. This has been evidenced by week after week of export and domestic sales lower than slaughter.
Now this week, after the USDA discovered some catch-up export reporting, export sales numbers surpassed slaughter but this total didn’t seem to slow the rapid decline in steer prices. Apparently, there are still greater numbers of hides for sale than the industry demand is to buy them.
One major producer announced its sales volume for the week, and still it failed to halt the decline. We went back 10 years on the Hidenet website but were unable to find a drop in steer prices like we have seen this week, or in the 30 days since the APLF closed in Hong Kong. Of course, the highest slaughter total since 2013 didn’t help and sellers had to lower their ideas to pick up as many bids as they could that would generate some sales volume.
Do the numbers show that there was enough sales volume to cause a pause in the decline, or maybe create a bounce? We don’t think so. The supply numbers still appear to be too great. Like putting merchandise on sale at retail, lower prices typically increase buyer demand and to some degree, we have seen this over the past 5 trading days. However, we still think that prices have to drop further to tempt buyers to lock in profits against their previous leather sales and trader short positions.
This article is courtesy of www.hidenet.com
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