“What can go wrong?” Well, last week showed us that things could get worse. The week started out poorly for U.S. hide sellers, even with hide prices at levels not seen since God knows when, some tanners continued to bid lower. Early in the week, to move any volume, U.S. Steer hide marketers had to lower their selling prices by $1.00 or more per piece. At the same time demand for U.S. Cow hides seemed to be rather subdued. Sales prices on the Cow hides that were moved were steady to down $1.00 per hide from their most recent sales levels. There continued to be lots of rumors in the market, as there had been for weeks, about large volume sales being made at prices that were well below recent market levels. Some of the rumored trades were at levels that were said to include quality claim settlement discounts, some not. Rumors after all are not normally one hundred percent accurate, that is why they are termed rumors. However, when the USDA released its Export Sales Report last Thursday for the sales made the previous week it became very clear that at least some of the rumors had validity. But a closer look at that USDA Export sales number and the export/shipment number that was included in the report it seems to be more likely that these large numbers, at least a portion of them, are the result of late reporting that should have been spread over prior weeks. Those prior weeks showed less than expected numbers for both sales and exports/shipments. Another thought that questions the numbers on the report is that the week this report covered was the week of the May Day holidays, which was not a busy week due to absence of buyers who were on holiday. With the threat coming on last Wednesday that, because of slow progress of the trade negotiation, the U.S. would on Friday morning be increasing the tariffs on the $200 billion of Chinese imports from 10 to 25 percent things got even quieter for the U.S. hide market.
Because last week’s activity we need to lower our call for the current FOB plant values for seasonal average weight Big Packer Steer hides to the following levels:
- Heavy Native Steer hides at between $38.00 and $40.00 per piece, down $2.00 for the week.
- Butt Branded Steer hides at between $33.00 and $34.00 per piece, down $1.00 for the week.
- Heavy Texas Steer hides at between $23.00 and $25.00 per piece, down $1.00 for the week.
The USDA Export Sales Report released on Thursday, May 9, 2019. for the week ending Thursday, May 2nd. stated that 863,800 U.S. raw and wet blue hides were sold for export during that week. This number is more than double the 400,900 units that were reportedly sold the prior week. China bought 492,300 pieces or 57 % of the raw and wet blue hides reported to have sold during the period.
The USDA estimated the U.S. Federally Inspected Slaughter, (FIS) for the week ending Saturday, May 11, 2019, was 664,000 cattle. That number down from the 670,000 head estimated to have been processed last week. The Year to Date FIS estimate is 11,692,000 cattle, up 149,000 head or 1.3% above a year ago.
We know that tanners need raw material, and we feel they will buy some U.S. raw and wet blue hides as soon their heads stop spinning from all the unknowns regarding the Trade War and Tariffs. When that will be, who knows, but what we do know is that tanners want to us and need U.S. raw and wet blue hides. It is good product, they can buy in volume, it simply works for them, and they are currently more than a good value.
I once knew a golfer who cheated so much that when he got a hole in one, he wrote down zero!
David Feherty, in his comical way, this week referred to Tommy Fleetwood as “Fairway Jesus”