THE HIDE MARKET – July 16, 2018
U.S. raw and wet blue cattle hide prices continued their decline last week, with Steer hide values declining by $1.00 to $2,00 per piece and U.S. Cow hide prices by between $.50 to $1.00 per piece. Those price spreads on the individual selections were dependent on weight range and origin. Our opinion is that a decent number of hides traded last week, although the consensus of the trade was that raw and wet blue hide sales fell below production for the week. It appeared that many of the hides that were sold were to help average down the tanners per hide costs so that the tanners would accept shipment. Which is a tactic in a market like this that has become all too common amongst tanners. Last week’s Cattle slaughter here is the U.S. came in as expected at 650,000 head. The Export Sales Report for Cattle hides, that came out last Thursday from the USDA, for business done the prior week, was a little lower than expected by most. Tanners do admit they are making good profits on the leather orders they have in hand. The trouble, they say, is the volume of orders they have are too few. Tanners continued to say that they are expecting to receive some more volumes orders as their busy season is approaching. One must assume that leather buyers are watching the hide market and holding back orders until they see it stabilize. The talk of a trade war between the U.S. and China also hangs over the hide market. The Chinese tanners are worried that if things continue to escalate their government may put import tariffs on U.S. raw hides. It is important to note that the possibility of that happening has not been mentioned by the Chinese government.
Here are our quotes for the FOB plant values of the seasonal average weight Big Packer Steer hide selections at the close of business last Friday:
- Heavy Native Steer hides between $54.00 and $56.00 per piece, down $2,00 for the week.
- Butt Branded Steer hides $43.00 per piece, down $1.00 per hide from our last week’s quote.
- Heavy Texas Steer hides between $34.00 and $35.00 per piece, down $1.00 for the week.
The Export Sales Report released by the USDA on July 12, 2018, for the week ending Thursday July 5th showed that 463,200 whole cattle hides, and wet blue equivalents were sold for export during that period. This number is down from the 485,200 pieces reported sold the previous week. The big buyer was China taking 274,900 of the units sold. Korea was the next largest buyer booking a net 66,700 piece.
The estimated Federally Inspected Slaughter, (FIS), of cattle for the week ending Saturday July 14, 2018, came in at an estimated 650,000 head. Year to Date FIS is an estimated 17,278,000 cattle, which is up 3 percent from the same period a year ago.
Values of some of the U.S hide selections have gotten to a point that they cannot seemingly go lower. The less desired selections like Number Three, Renderer, Small Packer and Branded Cow hides have fallen to points that they can’t go much lower since the cost of transporting, fleshing, curing, palletizing and shipping the hides to a tanner makes some of the lower end selections worthless/profitless. We have, in fact, already seen that Renderers across the country have stopped skinning the dead animals they bring to their plants. Instead they simply are rendering the hide along with the rest of the animal. This can happen as well with other hide selections such as Small Packers and Branded Cow hides if their values drop below profitability. We must also mention that it is important to the long-term health of the hide market that tanners live up too and take delivery of their outstanding contracts. WITHOUT RULES AND HONOR THERE CAN BE NO MARKET.
O’GRADY ON GOLF
“I’m very, very, weird, I play the game just for the art of it. The art of the discovery, the art of seeking, the art of real deep enthusiasm the game gives you. There’s always something to learn.”