Market reports

17 July 2002

In order to help the industry there are many market reports published in the various economical newspapers, magazines and websites. With the number of industry-dedicated websites increasing, so the number of reports are increasing exponentially. I believe that LeatherXchange alone have some ten reports. A couple of years ago, when talking about market reports, you mainly had the Jacobson report and Ron Sauers' Market News Service which was published until recently by the International Trade Centre in Geneva. Now we have tens of reports. Having seen several of these market reports, I wonder how reliable they are, and how much they actually reflect the real day-to-day market. Or are they 'just' an indication, particularly considering the widespread in prices one sometimes sees for the same commodity? In fact, Ron Sauer correctly warns that his report is a picture of the market as it is reported to him, and that it is up to the reader to make the proper deductions and reach the proper conclusions. All reports obviously depend on what the sources who collaborate with the report compilers put forward. By comparing and judging the incoming data, the report managers will have to compose what they believe is a truthful reflection of the actual situation. Yet still we see that in one report for some given week the price for, let us say, Russian wet salted boenia cattle hides in the 12/17kg range can run from $1.45 to $1.70. These price can differ widely from what is published by other reports. With such a spread it is, of course, extremely difficult to take the indication of a given report into account for your purchase within the market parameters,provided you intend to use the market reports as your Bible. I also wonder how much wishful thinking is built into the prices that are submitted to the report management. A reporting merchant, for instance, may wish that the price of his goods reaches the level he brings forward, while the actual market situation may be lower. Also he might want to try to use the report in order to give a certain picture to buyers worldwide. In short there is a lot of subjectivity involved. The reliability of the price reporting entity is, therefore, one of the most important factors, that can make or break the reputation of a report. It is not that I am doubting the correctness of reports. On the contrary I believe some are precise, and definitely very useful. But in my view, the clearer and more reliable picture comes from the statistics, because in case there are indeed built-in inaccuracies, these inaccuracies are present in all data and hence cancel out their effect in a graphic long-term representation such as the Sauer Indices. How useful are the price reports in periodicals? In a world that requires instant answers to questions, I don't think that price indications on industry periodicals are of any use anymore, except as background music. The data when read is extremely old, at least six weeks considering the time it takes to report, the time to go into print and the time to ship the magazine. In many cases, as far as I am concerned, the prices reported in magazines do not reflecting in any way the actual market situation of the moment. What use do you have for data you are reading in May referring to a situation in February, March or April, other than for statistical reasons for which the time factor is unimportant? How much is the data in a market report worth in terms of time and money? Are you ready to put $1,000 +/- on the line and get an over-complete package of market reports, that will take you a full day to scrutinise, or will you limit yourself by subscribing to a less complete but cheaper report? Furthermore, aren't we risking being drowned by a flood of offered information, that may have its practical importance when consulting specific details? Are these markets reports a means without which you can't trade? In such a flood of data, only a small part can be of use to each subject, except when you talk about those traders who work all over the world, but how many of them are still around. What is the worth of a price index of central African dry country hides to an exporter or importer of wet salted US cattle hides? If the data for a large variety of countries is part of one global report, I think this is fine, but if the importer of US hides pays for a package of different reports, amongst which there is one dealing with the market he actually wishes to consult, isn't he throwing away money by paying for all the reports? Couldn't he just do with the report on the US market, and pay for that? The quantity of information to which we have access, either free of charge or against subscription, is gigantic, monumental and growing. And each single part of this information at least has its importance to somebody or, at least, that is what the creators suppose. If we would just update ourselves by reading and absorbing all that available data, we wouldn't have time to work anymore. Let us also reflect a second about the recent drastic changes a well known service company has made to their basic approach by determining the value of certain offers of information and trading packages to which you can subscribe on the internet. A year or so ago you would subscribe to a complete B2B-plus-info package. As it was promoted one presumed that you practically paid for the B2B service and that the information, market reports and other whistles and bells came along free of charge. Today, the cost of an information package, which is now offered separately, is valued at 70% of the price of the same information package plus the B2B trading package complete with the whistles and bells. Or to rephrase that, the actual trading part in today's B2B is valued at only 30% of the complete product, against a presumable 100% a year ago. It seems that my earlier scepticism was not without foundation. Therefore, I believe it is important for each company to find a practical equilibrium between the data it needs to do business, the price it has to pay for that data and the time you have to spend to become acquainted with the data, and the time you are left with to do your business. It's the business that generates your profit, and the information you acquire should be a helping factor. Let us not forget that we are in the leather trade, not in the information business. The information business reports are there to help and assist us, not vice versa, and we should certainly not allow the information business to dominate us. Sam Setter [email protected]

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