THE HIDE MARKET – SEPTEMBER 19, 2016
The market got off to a slow start last week, then on Wednesday Korea closed for the week to take their Harvest holidays, and on Thursday China shutdown for their Mid-Autumn Festival. That, for the most part, closed the offices of 80 percent of the buyers of U.S. raw hides, skins and wet blue leather. We expected very limited sales would transpire last week. However these holidays did not stop sales to both Korea and China all that much. After all, every raw material buyer, no matter where they are in the world, has a mobile phone and by the end of the week there was a fair amount of business concluded, far more hides and wet blue were sold last week than we expected would have been. Many sellers were coming off a decent week worth of business the prior week so they raised their asking prices for the hides they offered. For their part, tanners in Asia continued to say that the leather market did not justify any rise in hide prices and refused to meet producers increased asking prices. In the end the market remained steady with any changes in price for any selection being $ .50 per piece up or down. Therefore we are keeping the current values of the various U.S. Steer hide selections unchanged, for the most part. We are putting the FOB plant value for Big Packer and equivalent Heavy Native Steer hides at between $73.00 and $74.50 per hide, which could be called up $0.50. We are leaving the value for the Big Packer Butt Branded Steer hide selection unchanged at between $71.00 and $72.50 per piece. The value for Big Packer Heavy Texas Steer hides we are saying is between $65.00 and $66.50 per unit, which would be down $0.50 per hide from our last week’s estimate. U.S. Cow hides, of either the spready or plump selections, sold last week at prices that were either steady to slightly higher. Cattle slaughter here last week was right around the expected 600,000 number, while packers continued to enjoy good profit margins. There was some interesting news in the trade last week, that being the move of Mr. John Hochstein from Cargill to National Beef Leather. We believe John’s departure from Cargill, which was planned, will not be detrimental to Cargill. In the long run his move to National Beef Leather will be good for the U.S. hide and wet blue leather industry.
The USDA’s Export Sales Report released on September 15, 2016 for sales made during the seven day period ending September 8, 2016 indicated that 431,100 hides and wet blue equivalents were sold for export during that period. This number is up from the 338,500 pieces reported sold for export during the previous week. China was the number one buyer purchasing 207,500 pieces or about 48 percent of the total sales.
The Federally Inspected Slaughter (FIS) for the week ending Saturday September 17, 2016 was an estimated 604,000 cattle. That number is up from the 578,081 head processed during same week last year. Year-to-date cattle slaughter is an estimated to be up 900,000 head or 4.4 percent from a year ago.
We anticipate that coming off of last week’s better-than-expected business the majority of U.S. hide suppliers will be asking slightly higher prices this week for any hides and wet blue they offer. There likely will be no change in the favorable level of demand for U.S. hides, but with U.S. hide supply remaining in line with this steady demand we expect any change in eventual sale prices will be small. All indications point to a continuation of the current market conditions for at least the near term. This week everyone will be looking to the Lineapelle Leather Show being held in Milan, Italy to shed some light on the leather trends and demand going forward.
“A bad attitude is worse than a bad swing.”
“Fear ruins more golf shots, for duffer and star, than any other one factor.”