THE HIDE MARKET – NOVEMBER 6, 2017
Trading of U.S. Steer hides was active last week, while the ability of U.S. suppliers to move their Cow hide productions remained limited. Sales prices improved for Steer hides on some selections, namely Heavy Native Steers and Butt Branded Steers, while other selections, like Branded Steer hides, saw their values remain unchanged. Cow hide prices remained under pressure, except for certain Cow selections from premium origins. The pressure on the Cow hide prices were, as we understand it, the result of the drop in South American W/B hide prices and a large number of European Cow hides that were offered in the market last week. U.S.D.A. reported that cattle slaughter in the U.S. picked up last week. This was a little bit of a surprise, since the price of slaughter cattle jump up during the second half of last week. The Export Sales number released by the U.S.D.A. last week for sales concluded during the 7-day period ending October 26th was down somewhat from the prior week but exports/shipments were at a level that is positive to the market. The explanations from many in the trade for recent increase in demand for U.S. hides: tanners’ are wanting to buy what are considered “better season” hides, along with a limited increase in overall leather demand. From what we can observe, the demand for both auto and furniture upholstery leathers continues to be more than decent. It was also reported that there has been at least some pick-up in leather orders for shoe uppers and handbags. As mentioned above there were some sale price increases on some of the U.S. Big Packer and equivalent Steer hide selections last week. The Butt Branded Steer hide selection saw good demand last week and an increase in value during the week closing the week up $1.00 at between $57.00 and $58.00 per hide. And, there seemed to be an increase in the demand for Heavy Native Steer hides last week prompting us to move their value up $1.00 from the prior week(s) to between $61.00-62.00 per piece FOB plant. However, we saw no reason last week to change our price quote for the Big Packer Heavy Texas Steer hides, which we will leave at between $48.00 and $50.00 per hide FOB plant basis.
The Export Sales Report released by the USDA on November 1, 2017 for the seven-day period ending Thursday, October 26th showed that 483,900 whole cattle hides, and wet blue equivalents were sold for export during that week. That total is down from the prior week’s 559,900 pieces sold for export. China was the biggest buyer taking 263,400 units reported as sold.
Federally Inspected Slaughter, (FIS) of cattle for the week ending Saturday November 4, 2017, was estimated to be 642,000 head, up from the estimated 617,000 head processed the prior week. Year to Date FIS is up 1,428,000 animals or 5.6 percent from the same period last year.
We expect to see U.S. Steer hide prices move a little higher this week. We are basing our prediction on the fact there were unfilled orders in the market for U.S. Steer hides at the close of business on last Friday. Not that we expect any big jump in U.S. Steer hide values, with cattle slaughter here in the U.S. expected to remain well above a year ago levels right through the end of this year and beyond. We also expect to see demand to temporarily soften when suppliers begin to sell their January/February productions. We also expect that U.S. Cow hide prices are either at or near the bottom. We understand that South American wet blue hides and crust leather prices, that have had a negative effect on U.S. Cow hide values, have bottomed out. And, we should keep in mind that sale prices for most all of the U.S. raw hide selections are running between 20 to 30 percent below the price levels this time last year. That fact can’t hurt leather orders and should allow tanners a profit.
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