THE HIDE MARKET – AUGUST 22, 2016
The U.S. hide market was rather active last week. Going into the week we were expecting interest from the tanner-side to be reduced from the prior week, but in the end we found that not to be the case. As for the business done we are calling the sale prices for basically all of the U.S. Steer hide selections steady with the prior week’s levels. The tanners who were in the market last week were not the same tanners who were buying the prior week. It seems to us that hide prices have reached levels that tanners generally feel are at least workable with their current leather orders. We did not hear that leather demand, leather prices, or split prices had improved, but rather that tanners could squeeze out a little profit at the current hide price levels. It was also mentioned by more than one of those in the trade that some tanners needed to buy some raw material just because their ownership had run lower than they felt conformable with. We are leaving the market prices for the U.S. Big Packer Steer hide selections unchanged from a week ago. That leaves the Heavy Native Steer hides at $73.00 per piece FOB plant, the Butt Branded Steer value at $71.00 per hide plant and the Heavy Texas Steer hide selection at $65.00 per piece FOB plant basis. The Native and Branded Heifer selections were reported to have traded up $1.50 last week after being traded down $1.00 the previous week. Demand for U.S. Cow hides was mixed last week, with Dairy Cow hides holding their own, as demand remained fair and suppliers held onto their well sold ahead positions. There were some rumors that marketers of certain Dairy Cow hide productions were able to move some hides at prices that were a little above their most recent sales levels. Some of the lighter weight Plump Native and Branded Cow hide productions were reported to be under some downward price pressure but we did not hear that suppliers of these hides caved to that pressure. All in all last week was the second good one in a row, putting some stability in the U.S. hide market.
The Export Sales Report published by the USDA on August 18, 2016 for sales made during the week ending August 11, 2016 showed 449,100 hides and wet blue equivalents were sold for export. This number is up considerably from the 409,800 pieces reported sold for export the previous week. China was the leading purchaser booking 252,700 pieces. The reported Weekly Exports (shipments) continue to run higher than reported sales.
The Federally Inspected Slaughter (FIS) for the week ending Saturday August 20, 2016 was estimated at 599,000 cattle. This number is up from the “revised” estimated 581,000 head processed the previous week. Year-to-date cattle slaughter is an estimated 18,785,000 head up 4.1 percent from a year ago.
Coming off of the last couple weeks in which a relatively good amount of business was booked, we are starting this week with the contention that the U.S. hide market is grounded. Will U.S. hide prices jump up this week? We don’t think so, but we sure don’t think there is a chance they decline either. We are told that U.S. Beef packers are still making money on every head they process so we expect this week’s slaughter number will run around the same level it has for the last month or so. We understand that tanners are still waiting for some meaningful leather orders and it just might be that a grounded U.S. hide market could increase leather buyers interest in getting some leather bought. Many suppliers begin their travels in Asia this week before the industry descends upon the All China Leather Exhibition in Shanghai August 31st – September 2nd. We don’t believe this will be an active week, as those travelling will not be eager to move many hides coming off the last two weeks and the tanners will wait to hear what their visitors have to say before deciding what actions they will take during the Shanghai show next week.
“Golf isn’t like other sports where you can take a player out if he’s having a bad day. You have to play the whole game.” – Phil Blackmar, on shooting a third-round 78 that cost him a tournament.
“If I had been in the gallery, I’d have gone home.” – Johnny Miller, on shooting a 39 on the front nine holes of a tournament.