THE HIDE MARKET – AUGUST 13, 2018
There was a good bit of activity int the U.S. hide market last week. Supplier’s offer lists were less populated than they had been in some time and the asking prices on those lists were steady or higher than last offerings. Also, the shipment periods on most of the offerings were pushed out by a month on average from the prior week’s offer lists. As the week moved on, a sizable number of Steer hides appeared to have been sold at prices that were steady to slightly higher than last traded levels. Seller of U.S. Cow hides were also able to move a decent number of hides. However, except for some highly sought-after origins their selling prices were steady at best with recent levels. When the USDA released its Export Sales Numbers for U.S. raw and wet blue hides on Thursday of last week for the prior week’s sales it reflected what many in the trade had been saying for two weeks. That is, that the reported sales number for the prior week was not accurate being well below what was expected. And, last week’s sales report made U.S. hide suppliers feel much better about the market and added a little starch to the asking prices. We would say that one should average the last two report to get a better picture of what was traded on a weekly basis. Tanners for their part said that much of the sales that were reported were the result of traders covering short positions and some tanners taking advantage of lower prices to average down their raw material ownership. Another factor contributing to the demand seen out of China was that tanners wanted to get some raw and wet blue hides delivered before the potential retaliatory tariffs threatened by the Chinese government could go into effect. Tanners everywhere continued to say that with hide prices at their current levels they can make a nice profit on the finished leather they sell but there are just are not enough orders to move the needle on hide prices.
Cattle slaughter reported for the U.S. last week jumped up a little. The demand for beef allowed packers to pay a little more for cattle while at the same time increase their per head profit margins. All in all, last week was a good one for U.S. hide suppliers, that is two good weeks in a row.
Our quotes for last week’s FOB plant values for seasonal average weight Big Packer Steer hide selections:
- Heavy Native Steer hides at $56.00 per hide, up $ .50 from the prior week.
- Butt Branded Steer hides at $43.00 to $45.00 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 August 2 nd stated that 1,288,200 whole cattle hides, and wet blue equivalents were sold for export during that period. This number is up from the 359,400 pieces reported as sold during the previous week. Korea was the largest buyer credited with purchasing 463,000 units, all raw hides. China was a close second buying 433,900 pieces.
The estimated Federally Inspected Slaughter, (FIS), during the week ending Saturday August 11, 2018, came in at 645,000 head of cattle. The year to date FIS is up 2.9 % from a year ago.
Will U.S. raw and wet blue hide suppliers be able move the prices of their products higher this week? We are of the thinking that may be possible. For the U.S. Steer/Heifer hide producers we think they will be able to get some improvement because there are very few substitutes for these selections. Substance, grain quality and available quantities of the U.S. Steer hides make them special. We expect leather demand will improve as we move toward the Fall and demand for U.S. Steer/Heifer hides to follow. For U.S. Cow hides we are not as positive because of competing items from around the world. But, then again, the current prices for the various U.S. Cow hide selections are at extremely low levels. Looking for better days!
Oldie but Goodies
“I won’t know until my barber tells me on Monday.”
– Knute Rockne, when asked why Notre Dame had lost a game.