U.S. Steer hide prices pretty much held their own last week, with some sales reported at slightly higher levels and others reported at marginally lower prices. At the same time, U.S. Cow hide suppliers struggled to hold their selling prices steady on Branded Cow hides, though they were able to get “up” money on their Dairy Cow hide productions. Small Packer, Renderer, and Number Three hides continued to be difficult to move. With the prices of the better-grading hides as low as they currently are, tanners see no need to use lower grade raw material. The total number of U.S. hides traded last week, by our estimation, did not match production. Why weren’t more U.S. hides traded last week? From our view point, missing from the market were workable bids from the Chinese tanners. The word “workable” is key here. There were a good number of bids coming out of China, but many were just too low for suppliers to accept. Particularly Steer hide sellers who, for the most part, appear to be well enough sold ahead and showed no interest in taking “down” money for what would likely be their November shipment hides. Tanners continue to complain that they do not have enough leather orders to match the world-wide supply of hides. There is truth to this statement and it is reflected in current hide prices, which are at historically low levels. In fact, some of the lower grading hide selections have been removed from the market place entirely. Those lower grade hides are simply not being saved, as the cost of processing and transportation to Asia is higher than the return for those lower grade hides. Chinese tanners are also very concerned about the Trade War between the U.S. and China and the Tariffs that will affect their businesses, and we feel this is being reflected in their raw hide bids. Cattle slaughter in the U.S. last week continued to run as close to full capacity as possible. The beef business remains very good, and consequently both packers and feeders are profitable. Limiting any increase in slaughter are plant capacities and the availability of labor. The USDA,’s Export Sales Report released last Thursday was very respectable for both sales and shipments of both raw and wet blue U.S. hides.
As for the FOB plant values on seasonal average weight Big Packer Steer hide selections we are saying:
- Heavy Native Steer hides at between $54.00 and $55.00 per piece, unchanged from the prior week.
- Butt Branded Steer hides at between $44.00 and $45.00 per piece, unchanged from the prior week.
- Heavy Texas Steer hides at between $33.00 and $34.00 per piece, unchanged from the prior week.
The Export Sales Report released by the USDA on September 20, 2018, for the week ending Thursday September 13th stated that 589,800 whole cattle hides, and wet blue equivalents were sold for export during that 7-day period. China, the number one buyer, purchased 322,500 of the units sold. Exports/shipments for the period were reported to be a very respectable 615,700 pieces.
The USDA estimated the U.S. Federally Inspected Cattle Slaughter, (FIS) for the week ending Saturday, September 22, 2018, to be 657,000 head. This number is up a touch from the prior week’s 652,000 head processed. Year to date the FIS is up 2.7 % from a year asgo.
Asian tanners will be out this week for one to three days, depending on the country, celebrating their Autumn Holidays. However, there will be enough going on this week to keep those involved in the Hide and Leather Industries busy. Many will be in Italy attending the Lineapelle leather show, looking for an indication of future leather demand. Also, the U.S. Hide, Skin and Leather Association will be holding its Annual Meeting in Chicago on Wednesday and Thursday of this week. We understand that a delegation of Chinese tanners, along with representatives from their trade organization the “China Leather Industries Association” will be attending the Chicago meeting. That should make for an interesting meeting as many marketers of U.S. hides are not happy with the how many of the Chinese tanners have not lived up to their contractual agreements.
Two golfers are getting set for their tee shots at the fourth hole. The first golfer says, “Hey, guess what? I got a set of clubs for my wife.” The second golfer replies, “Great trade!”