Last week started slowly, which was not surprising. For one thing- it was a holiday week, with last Thursday being our national Thanksgiving Day holiday here in the U.S. For another- the U.S. hide market had been limping along for several weeks. A big part of that decline in interest in U.S. raw and wet blue hides was due to a lack of product available for shipment and importation into China before January 1, 2019. That is the date when tariffs on U.S. hides entering China are threatened to increase to 25 percent. However, by Friday of last week, there were a good number of tanners in the market bidding on U.S. Steer and Cow hides. Those bids, for the most part, were lower than last traded levels. Sellers of U.S. Cow hides rejected those lower bids, but suppliers of U.S. Heavy Native and Butt Branded Steer hides did accept some lower bids in order to keep product moving. which resulted in a good number of Native and Butt Branded Steers being traded. The spread between the Native & Butt Branded Steer hide selections and the Heavy Texas & Branded Steer hide selections began to shrink. The large spread between these selections has been the result of robust demand from the auto upholstery tanners for Native and Butt Branded Steer hides. In recent weeks, that demand has waned, leaving more Native and Butt Branded Steer hides searching for buyers. To attract buyers, the price for a Native or Butt Branded Steer hide had to be moved closer to the Heavy Texas and Branded Steer hide sales prices. Again, U.S. Cow hide sales prices last week remained steady with most recent sales levels. The fact is U.S. Cow hide prices are just damn cheap. USDA’s Export Sales Report sales number for cattle hides released last Friday for the week ending Thursday, November 15th was not a great one but, it was higher than the number that was reported for the previous week. The exports/actual shipments number reported for the week ending the 15th was friendlier to the market, than the reported sales number.
Following 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 week:
- Heavy Native Steer hides at between $46.00 and $47.00 per piece, down $2.00 for the week.
- Butt Branded Steer hides at between $40.00 and $42.00 per piece, down $1.50 for the week.
- Heavy Texas Steer hides at between $30.00 and $32.00 per piece, down $2.00 for the week.
The Export Sales Report released by the USDA on November 23, 2018, for the week ending Thursday, November 15th, stated that 431,700 whole cattle hide, and wet blue equivalents were sold for export during that period. This number is up from the 390,800 units sold during the prior week. China was the most active buyer, taking 189,800 pieces. Korea was the second biggest buyer purchasing 86,600 units.
The USDA estimated the U.S. Federally Inspected Slaughter, (FIS) for the week ending Saturday, November 24, 2018, was 570,000 cattle. This number is down from the 575,154 head processed during the corresponding week last year. Year-to-date the FIS is up 2.4% from last year’s level.
With our Thanksgiving Day holiday here in the U.S. now behind us, everyone here will be back at it this week. Although last week was a short one for the U.S., the overall feeling was that a good number of U.S. hides were traded, with a large portion of those appearing to be Steer hides. Were enough of those Steer hides sold to put a bottom in that market? We should find out this week. The questions regarding the trade war tariffs remain in place as we start the week. Hopefully some clarity on that situation will arise soon. The unknown hangs over all involved in trade between China and the U.S.A.
MORE WISDOM FROM JACK NICKLAUS
The key to playing well is to first understand who you are as a person, and then manage that.