APLF disappointing for US traders

23 May 2002

The Dam keeping major packers, traders and tanners apart finally burst towards the end of March. After more than two weeks of minimal volumes, large quantities of heavy Texas and branded steers changed hands at prices nearly 5% below the highs reached at the beginning of March. By the end of March, the market had slowed compared with the large volume of hides traded the week before. Steer prices fell $1 on average, but remained steady to those established during the previous week's trading frenzy. Then an explosion of prices caught everybody by surprise at the beginning of April with prices surging by 5% in less than 24 hours. The Hong Kong fair was a disappointment for the American contingent with high expectations of the market becoming established at higher levels. But just the opposite occurred. Higher prices discouraged the majority of tanners from bidding and packers left Hong Kong without selling their weekly production of heavy Texas and branded steers. Heavy Texas began the four weeks ended April 14 with asking prices of around $63 but many succumbed to bids of $60. One Korean/Chinese tanner bought heavily and helped maintain business at the $60 level. By week two, packers held to $60 in the hopes of success by the following week or the week after during the Hong Kong fair. In Hong Kong, heavy texas steers failed to attract any bids over the $61 limit. Branded steers continued to mirror heavy Texas. A good volume of sales were recorded at $58 at the beginning of the four week period. This continued to be the case until Hong Kong when branded steers were offered at $62 and later in the week at $61 but only found buyer apathy. Some interest was seen at $58 that was not even considered by packers. Prices for butt branded climbed as high as $61 by the middle week, although during the fair, trading was light, but what did sell was at $60 or $61 depending on average and origin. Colorado trading was minimal at the beginning of the period at $56 and trading remained quiet throughout the period with few if any being offered. Heavy native steers traded steady at the end of March as tanner demand remained solid and producers continued to be comfortably sold. Business was around $66.50-67 in spite of seller's efforts to attain increases. The following week, demand and supply of heavy natives remained fairly well in balance and resulted in prices steady on the previous week. Prices improved at the beginning of April to around $68 and, by the following week, producers were selling all they cared at advances of $1-2 over the previous week. Predictions Tanners admit that they will eventually need to buy, but appear to have enough inventory to delay purchases for maybe two or three weeks. This will lead once again to the current situation of the proverbial 'Mexican stand off' or a stand off between Asian tanners and American producers with branded material. It is unlikely to find anyone who expects to see prices higher than current levels in May or June as the supply is expected to increase and leather business typically slows at that time of the year. Exports Raw hide exports for the four weeks ended April 14 averaged 388,275. However, the period began with a weekly figure of just 277,000 pieces, 10% down on the week before. Then the following week, the figure jumped to 434,900 (54% up on the previous week) and stayed around this mark for the rest of the period. Unusually, China was the largest buyer with an average 127,400 pieces over the four week period. For example, in the week ended April 14, Hong Kong imported 41,400 pieces and China bought 165,500 pieces, and when combined, totals over 50% more than South Korea at 90,900. However, a disproportionate large share of hides reported to China went to the already-mentioned major Korean tanner in China. The reduced amount of raw hides exported to South Korea can partly be explained by a public holiday during the period, but also that most tanners in South Korea, and in other parts of Asia, appear to have adequate raw stock inventories both on order and on hand. Korea imported an average 91,850 pieces in the four week period, followed by Mexico with 71,500 pieces, Taiwan with 40,975 pieces and Japan with 36,950. Thailand's monthly average of 32,400 pieces was boosted by an above average import total of 48,600 hides during the third week. Hong Kong averaged 32,325 pieces, while Italy bought 13,900 raw hides plus 36,500 calf and kip skins. Wet-blue sales averaged 101,450 with Taiwan and Hong Kong the most significant buyers. Wet-blue split sales averaged 2,221,400lb. Hong Kong was the most active in this sector, taking 100% of wet-blue split sales in the first and fourth week. Raw hide sales averaged 3,806 033 and weekly exports averaged 362,900 (no data for these two categories was given the week ending March 31).

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