THE HIDE MARKET – MAY 22, 2017
The hide market finally awoke from hibernation last week and there was plenty of business to be done. Late the prior week, some customers whom had been sleeping on the market started to wake up and were looking to purchase hides. That late-week activity spilled into last week and the market was off and running from the start. This is not to say that prices had improved, with Butt Branded Steers first being traded at $66.00 FOB then inching down to $65.00 and by the week’s end touching $64.00. Prices, for the most part, continued down from the previous week, and demand out of a sizable portion of the Chinese tanning industry remained lackluster. With that country’s largest tanners opting to remain out of the game, did the market find a bottom? The automotive business was a real market driver in the first quarter of this year, but that has slowed here in the second quarter. If demand out of China has indeed picked up and the automotive business south of the U.S. border is able to still find a way to support the Big Packer Steer market, then we very well may have found ourselves a bottom. If that is not the case then we might continue to see the market come down, albeit at a much slower pace than the prior three to four weeks.
Trading was muffled on Big Packer Heavy Native Steer hides last week, so we are leaving the FOB plant price for that selection between $67.00 and $68.00 per piece. Butt Branded Steer hides, as mentioned above, were traded from $64.00 to $66.00. The Big Packer Heavy Texas Steer hide selection was reported to have sold at $62.00 per piece. The U.S. Cow hide market is still under pressure, from Branded Plump Cows up to Holstein Cows. The cow market was down again last week from $1.00 to $2.00 as the upholstery business continues to struggle. It’ll likely be June before this business picks up, that is when tanners will need to buy hides for their Autumn productions. Also, it was heard that European suppliers are asking their Chinese customers for bids which surely will put pressure on U.S. cows for the time being.
The Export Sales Report released by the USDA on May 18, 2017 showed net sales of 533,000 U.S. cattle hides and wet blue equivalents to have been sold for export during the 7-day period ending Thursday May 11, 2017. This number is up from the 506,600 pieces reported as sold for export the prior week. China was in the top buyer spot for the week with a reported 156,200 pieces purchased and Korea was the second largest buyer, taking 98,000 units with the clear majority being raw hides.
The Federally Inspected Slaughter (FIS) for the week ending Saturday May 20, 2017 was an estimated 602,000 cattle. That number was down from the 612,000 head processed the previous week. For the same period, last year, the FIS was 590,000 head. Year-to-Date FIS is up 631,000 head or 5.6 percent from a year ago.
We would not be surprised if Packers offer lists this week are minimal as they surely will be feeling good coming off last week. They will try to hold the line and put a real bottom in the market, but really it is the buyer that determines the bottom and we will be looking to see if there is finally some demand out of the largest raw hide buyers. If the tanners do have an appetite for raw hides we will surely see the market stabilize and possibly bounce upward. If the demand is not present this week then the market will continue at a controlled descent. We really must wait and see what develops this week, as for the first time in a while the market could go in either direction.
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