THE HIDE MARKET – NOVEMBER 21, 2016
The U.S. dollar was stronger, U.S. cattle slaughter was up last week, numerous tanners continued to complain of poor leather orders, and the holidays are rapidly approaching. Couple all that with the uncertainty as to how the Trump presidency will affect international trade, and you can understand why the U.S. hide market was for the most part inactive last week. There were bids from tanners for U.S. Steer and Cow hides throughout last week, but they were fewer than they had been, and many were at levels that proved unattractive to sellers. It was also evident during the week that sellers remained comfortable with their sold ahead positions, and countering that fact was our understanding that many tanners did not feel an urgency to buy raw material. Many tanners have been in the market recently to cover at least a good part of their anticipated needs. Although there were reports from tanners in China that they were able to purchase U.S. Steer hides either directly from packers or from traders, at prices that were a dollar or so lower than reported prices here, we have to call last week’s U.S. Steer hide market steady. We would add that by week’s end, U.S. Steer hide prices were on shaky ground. That leaves our last week’s FOB plant price for seasonal average weight Big Packer Heavy Native Steer hides at $77.00 per piece, and seasonal average Big Packer Butt Branded Steer hide priced at between $75.00 and $76.00 per piece plant basis. Our best guess for value of the seasonal average weight Big Packer Heavy Texas Steer (HTS) hide selection is USD 70.00 per hide FOB plant basis. Sales of U.S. Cow hides may have been like Steer hide sales in that they were limited, but prices unlike U.S. Steer hide prices, ranged from steady to firmer. Demand for the Spready Dairy Cow selection continued to be quite good, and sellers of certain productions were able to move their sale prices up by a $1.00 per piece. The marketers of Plump/Beef type Cow hides, both Native and Branded, could sell the product they wished to move, but only at steady levels.
The USDA’s Export Sales Report released on November 17, 2016 for sales made during the seven day period ending November 10, 2016, indicated that 433,600 U.S. hides and wet blue equivalents were sold for export during that period. This number is down about 32 percent from the 644,100 pieces reported sold for export during the prior week, and down even more from the prior 4-week average sales number. We all knew sales had to slowdown, as there was no way they could maintain the weekly volumes we had seen for the prior month or so.
The Federally Inspected Slaughter (FIS) for the week ending Saturday November 19, 2016 came in at an estimated 629,000 cattle. This number is the largest weekly cattle slaughter of this year. Year-to-date the FIS is up 5.2 percent or 1,328,000 head from a year ago.
On Thursday of this week in the U.S., we will be celebrating our Thanksgiving Day. This national holiday is surrounded by travel to and from family gatherings, which is the main focus of our Thanksgiving Day. It will take many in the meat packing, hide, and leather industry out of their offices for a minimum of one full day, but more likely closer to two days. Some here will be distracted from the routines of business at least for a short time. However, we do not expect that the holiday will have any big impact on the amount of business put together by U.S. hide and wet blue sellers, and their tanner customers. Rather, it is the forces mentioned above, such as currency exchange rates, leather order volume, and cattle slaughter that will determine the volume and values of U.S. hides traded this week and going forward. When taking those factors into account, we feel that any movement in U.S. Steer hide prices would be lower. U.S. Cow hide values are another story, and we expect them to hold their own.
“Give me a millionaire with a fast backswing, and I can have a very enjoyable afternoon.”
– George Low