THE HIDE MARKET – DECEMBER 3, 2018
Trading of U.S. raw and wet blue cattle hides slowed further last week. Most notable was the lack of interest found for the Heavy Native Steer hide selection. Due to the decline of demand from the auto upholstery tanners, the premium that Heavy Native Steer hides had previously enjoyed over the Branded Steer selections continues to narrow. This is not to say that the other Steer hide selection values were not under downward pressure, but just that pressure on the Branded Steer hide selections was not to the degree of the pressure on Native Steers. Again, last week, the consensuses of those marketing U.S. hides were that the number of U.S. Steer hides sold did not equal to the week’s production. U.S. Cow hide sellers faired a little better than those marketing Steer hides, although selling prices did not improve from prior levels. Sales of both the Plump and Spready Cow hide selections were reported at steady to $.50 per piece lower. The pending January 1, 2019 Chinese tariff increase to 25 percent on U.S. raw and wet blue hides hung over the market all week. Then, as we are happy to mention, finally, there was some positive news regarding the ongoing U.S.-China trade negotiations. President Trump and Xi Jinping met on Saturday at the G20 Summit in Buenos Aires to discuss the progress of the trade talks between the U.S. and China, and several important details have already been announced this week. Namely, the U.S. and China have both agreed to hold off on any additional tariff increases which were previously scheduled to take effect after January 1, 2019. They agreed to this delay in order to allow time to negotiate a new trade agreement without the added economic pressures of rising tariffs. Therefore, the tariff on hides & skins going to China should remain at the current 5% level, and not increase to 25% on January 1 as previously scheduled. We feel that this should be a huge boost for the hide industry.
Here are what we see as the FOB plant values for the seasonal average weight Big Packer Steer hide selections at the close of business last Friday:
- Heavy Native Steer hides at between $44.00 and $46.00 per piece, down $1.50 for the week.
- Butt Branded Steer hides at $40.00 per piece, down $1.00 for the week.
- Heavy Texas Steer hides at between $30.00 and $32.00 per piece, no change for the week.
The Export Sales Report released by the USDA on November 29, 2018, for the week ending Thursday, November 22nd stated that 447,300 whole cattle hide, and wet blue equivalents were sold for export during that 7-day period. This number is up a touch from the 431,700 pieces traded the prior week. China was the most active buyer, taking 246,600 pieces. Mexico the number two buyer taking 35,300 units. Shipments/actual exports during the reported period was healthy 533,700 pieces.
The USDA estimated the U.S. Federally Inspected Slaughter, (FIS) for the week ending Saturday, December1, 2018, was 643,000 cattle. This number is up from the 570,000 head processed during the prior holiday shorted week. Year-to-date the FIS remained up 2.4% from last year’s number
Let’s see what positive effect, if any, last weekend’s announcement regarding the delaying in additional tariffs on U.S. raw and wet blue hides will have on the market. We think that it must to be a positive, and will put buyers and sellers more at ease and more willing to trade, at least in the short term. No question that the tariff threat had not only Chinese tanners standing on the sideline, but also tanners in other parts of the world who use U.S. raw material. Now news regarding additional tariffs, for the next 90 days at least, look to have stabilized. That should bring more buyers to the table increasing the demand for U.S. hides. Well, we expect that to be the case. Hope we are right in our estimation.
CREATIVE PUNS FOR THE EDUCATED MIND
Time flies like an arrow. Fruit flies like a banana
No matter how much you push the envelope it’ll still be stationary.