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BRAZIL
Nothing new is practically
really going on in Brazil. We had another week in a row, with many people
taking free time or vacations also, same as in Europe.
The main customer is taking
his vacations. They are not going to buy anything right now. On the contrary,
the strategy is to see how long can the patient agonize. Showing weakness right
now is the worst of things. Showing eagerness for selling anything at any price
is a sign of weakness. Those who can, should avoid it, for sure.
But the market is big, although
we all say all the time is rather small, but more like an expression we use.
Yes, regarding the big players of the market, it is small. But there is still
space and small and medium players are still a lot.
Some of them are taking the
opportunity to propose some starting business at this point, since they cannot
wait due to their need, but also they are going to make their choice among
everyone, for those who have a less proud attitude towards their prices…
Everybody knows the market
is down and prices are lower than they were some days, or weeks ago. So, still
asking for the same prices as before is something becoming a little bit
ridiculous at this point. Most tanners are already working on a realistic
basis.
The worst is to know that
when the market is going down, or believe it’s going down, sales don’t happen.
Either it must start going up again or reach the bottom as fast as possible in
order to make the market come back again. The problem is that this happened in
a bad moment. It’s the interval of the year…and we are only going to see what
happens after the second session starts again…
Regarding the episode with
IFC in the leather market, let me clarify that what I referred was regarding
their appearance and disappearance in the leather market. It doesn’t have
anything to do with their activity in the meat business, which by the way, it
was reduced this week due to a hold on beef exports to the US.
This clarification was
needed as I had some people asking me about the IFC case.
Another clarification is
that their situation was not caused because they dealt mostly with a particular
customer with whom few suppliers would do it, but because of lack of planning
and wishful thinking that getting into the leather market would be only a
question of doing it. The lack of professionalism was the main reason of the
resulting failure in this case.
Calcados Maide closed their
shoe production plant, in the south. This was a very traditional shoe factory
of Brazil.At the same time, some senators and deputies are saying they will
vote or promote or whatever it is they are going to do, to take action
regarding the unfavorable situation that the foreign exchange rate brings to
everyone in the country that exports anything. Somebody should do something
really quick before we have to compare this as to giving medicine to an already
dead patient….
Doha, a dangerous result for some bigger emerging
countries.
If we take the right word
for emerging means something that is on the movement of getting out from
something, usually water. Something like that. Well, it is not the case of many
countries, including Brazil. Brazil is stuck already for many years in a row.
There is nothing emerging here. The only emerging thing around here is the lack
of management of the country, and why not also say, the lack of shame for
certain attitudes from the government. Anyway, it’s very noble to take proud
positions on negotiations, however sometimes is not so smart. We cannot forget
that those who are mostly criticized by this government, like Americans and
Europeans, are the main buyers of the world for anything we
sell/produce/export. And if our representatives stop and think about it for a
minute, they wouldn’t take so proud attitudes regarding negotiations. After all
these countries are the main buyers for everything world wide.
It is true that there is
also the same consumption elsewhere, however it is so much spread worldwide,
and also you would have to also count that other countries will not have the
very same idea as well.
When countries sit at a
table for negotiating the future of their own trading, that speech of union and
having same targets and bla bla bla, is put aside, and the interests which
everyone is there to defend speak louder than anything else.
All the countries that
compound the G20 have their own interests to defend on their own behalf, and
they will do it anyway. So, if you take a firm position on anything, don`t
expect that another country will stand beside or behind you.
According to the
representative of Brazil “everyone lost”. Maybe under this prospective. Most
probably what will happen is that he lost, and Brazil lost. The buyers will
certainly gather some other countries and obtain the same they asked from him.
They just have to negotiate loans and conveniences. That’s all…
I am not saying you should
bend yourself, but not to exaggerate pretending you are what you are not, or
having the power you don’t have…and also don’t pretend you have that much
influence among Mercosur countries, and count that everyone is going to defend
your point t of view, because you don’t and this has a small chance to
happen(or do you think the other countries of the block will do it for free ?).
Dollar rate ends the week at
R$ 1.56 (no comments…).
Prices of the week:
Wet blue, whole hides,
machine flayed, full substance, average 48/52 ft, average 24 kg
Selection TR1 at around $
1.35/ft CFR.
Selection TR2 at around $
1.25/ft CFR.
or
Selection TR1/TR2 70/30% or
80/20% at around $ 1.28/ft CFR.
Lower grades than these were
not available for months now, but it`s more likely there is going to be some
offer ahead.
The crust leather for
upholstery, in substance 0.9/1.1 mm, in sizes varying from 48 to 56 ft:
$ 1.32/ft CFR for selection
TR1
$ 1.15/ft CFR for selection
TR2
Lower grades than these are
not available. It`s either consumed domestically or sold months ahead. But now
it might be available again.
The automotive upholstery
leather, in substances 1.1/1.3 to 1.2/1.4 mm, stucco and buffed, at:
$ 1.50/ft CFR for selection
TR1
$ 1.40/ft CFR for selection
TR2
$ 1.25/ft CFR for selection
TR2 + TR3
ARGENTINA
In Argentina the week didn’t bring any news
regarding selling prices, as even raw material costing less (again), other
costs are maintained or are even higher, but we can see that a certain pressure
already started from the outside.
All tanneries are already
within the spirit of the “north hemisphere vacation mood”, and are already
reducing productions.Therefore the demand for raw material was controlled and
nothing happened to make any kind of pressure even if the slaughter level is a
bit below the expected for this time of the year.
Traditional buyers are going
on vacation, and leaving behind some problems like inflation, unfavorable
exchange rate, higher costs, etc. All these are problems that are still going
to be there when they come back…
However, for the benefit of
the Argentinean tanners, the situation in the country is easier than in Brazil,
where you have such a big number of tanneries that makes demand difficult to
reduce as fast as in Argentina.
In Argentina, the crust leather for automotive upholstery, in substance 1.1/1.3 to 1.2/1.4 mm, has been
sold at levels like:
$ 1.58 – 1.62/ft CFR for
material that can either be stucco and buffed for the most requiring customers,
but usually sold for full grain type of leather.
And at $ 1.48 – 1.52/ft CFR
for a medium grade, stucco and buffed.
For upholstery crust
leather, we can find prices from $ 1.20 up to 1.45/ft CFR, depending on
selection, region, substance, etc.
For shoes, in substance
1.2/1.4 mm, natural/not dyed, prices have been:
TR1 – $ 2.20/ft CFR
TR2 - $ 1.85
TR3 - $ 1.65
Everything below is
considering fresh and salted, no bulls. Range weight for salted is 14-19 kg and
for fresh hides is -/24 kg.
Also the conversion was made
considering the Dollar rate of Friday in Buenos Aires at $ 3.04 for this week.
Please note in some items we
calculated the average price, so it might happen someone is paying more for
same.
1) Buenos Aires / Mendoza
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Salted
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Fresh
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Steers
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$ 1.18
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$ 0.99
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Cows
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$ 1.05
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$ 0.88
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Heifers
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$ 1.15
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$ 0.96
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2) Cordoba /
Santa Fe / San Juan
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Salted
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Fresh
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Steers
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$ 0.99
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$ 0.82
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Cows
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$ 0.92
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$ 0.77
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Heifers
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$ 0.95
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$ 0.79
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Pay attention in what the most
experienced do…
The raise of grains
worldwide had brought a problem for the beef industry everywhere. Many cattle
breeders have changed, and some are changing their activity for planting seeds,
instead.It seems it’s cheaper for doing it, for those who have the land, and
this is bringing more difficult for maintaining prices of live cattle paid by
the packers everywhere.
JBS, who doesn’t need to be
introduced, is intending to buy more packers worldwide. Their vision is that
the demand for meat will grow (with which I fully agree), and also that price
of meat will increase sooner or later (with which we are obliged to agree for
the obvious reason that the lack of meat will cause this).
We all know world population
is growing and the cattle is not, or is barely doing it, so the most obvious
conclusion is that this is going to happen.
Let us not forget that all
of us depend directly on the development of this situation.
There is one phrase that has
the right definition about this situation, which is also a situation that the
leather market and business is already experiencing for a while already:
Tomorrow the winner will be the one that can lose money for a longer period of
time…
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