THE HIDE MARKET – AUGUST 6, 2018
Things really started slowly for the U.S. hide market last week. U.S. raw and wet blue hide suppliers, for the most part, all raised their asking prices on the products that they offered. Coming off what appeared to be two good weeks of sales, many suppliers had the feeling/hope that maybe the long downward price trend had finally come to an end and that hide prices had bottomed. The week started with a sizable number of tanners bidding, and, as has been the case for some time now, those initial bids were either at last traded levels or well below those levels. To our knowledge all the lower bids were countered by suppliers as they remained positive about the market. Even with most of the Korean tanners on Summer holiday last week U.S. hide suppliers were feeling positive about the market early in the week. But, as the week progressed a couple things happened that made most involved in the trade wonder where the market was headed. Firstly, the export sales report number for cattle hides released last Thursday by the USDA for the week ending July 26th were far below what those marketing U.S. hides had expected them to be. Then, last Friday, the Chinese government released their list of items they would apply retaliatory tariffs to if the U.S. government implemented its threated of import tariffs on numerous Chinese products. On that Chinese list were U.S. raw and wet blue cattle hides, skins and leather. This tariff situation makes everyone wonder, what is going to happen now? Through some research into the USDA’s Export Sales Report information, we came to understand that two large U.S. producers/suppliers, one of raw hides and the other of wet blue hides, did not report their sales for that period to the USDA in time, calling the report in question. We expect to see those missing sales numbers show up in the Export Sales Report the USDA publishes for this week. Regarding the Chinese tariff announcement, the consequences of tariffs that MAY BE LEVIED on U.S. hides, skins and leather were not yet fully known at the close of business last Friday. As for what we could ascertain, the Chinese proposed tariff on U.S raw hides would be set at 5 percent. Not a crippling amount.
For the U.S. raw hides that were traded last week, sale prices were at or around steady levels.
We will call last week’s FOB plant prices for seasonal average weight Big Packer Steer hide selections:
- Heavy Native Steer hides between $54.00 and $57.00 per hide, up $ .50 for the week.
- Butt Branded Steer hides at $43.50 per piece, up $ .50 for the week.
- Heavy Texas Steer hides $34.00 per hide, no change for the week.
The Export Sales Report released by the USDA on August 2, 2018, for the week ending Thursday July 26th showed that 359,400 whole cattle hides, and wet blue equivalents were sold for export during that period. This number is down from the 530,500 pieces reported as sold during the previous week. China was last week’s largest buyer booking 187,500 piecses or 52 percent of the total sales.
The estimated Federally Inspected Slaughter, (FIS), of cattle for the week ending Saturday August 4, 2018, was estimated by the USDA to 626,000 head. The year to date the FIS is up 2.9 % from a year ago.
This could be an interesting week for the U.S. hide market. The positives are that, from all reports, finished leather orders are picking up, albeit slowly. The seasonally best quality U.S. hides are now being marketed by suppliers, and the fact that hide prices are at a low point should interest buyers. The only negative to improved demand for U.S. hides is the unknown effect of the MAY BE LEVIED Chinese tariffs on U.S. raw and wet blue hides, skins and leather. That is like worrying that a little rain could ruin your weekend plans, while it will have little or no effect at all.
Oldie but Goodies
“I have a lifetime contract. That means I can’t be fired during the third quarter if we are ahead and moving the ball.”
– Lou Holtz, Arkansas football coach