Activity in the United States hide market picked up last week as tanners in Asia returned to their desks from various holidays across the Continent. The hide market had slowed in prior weeks with many returning home from the leather show in Shanghai and then the various Asian holidays. It was not surprising that the week started of a little subdued as tanners checked their positions and waited for packers and processors to put out their offer lists. By mid-week the market showed signs of life, although tanners were cautious to pay even steady money on Big Packer steer productions. We got the sense that by the end of the week tanners realized that they would have to pay no less than steady to buy any big packer steer hides. It is always hard to say for sure but we’re confident that at least a week’s production was sold. Suppliers of lower grain quality hides, such as Southwestern branded cows, were able to improve positions last week but sales prices still fail to cover processing charges causing these hides to be losers to those who produce them. The only bright side is that these selections are not stacking up in warehouses and they are finally moving. Although, tanners have reported that their inventories are enough for current leather production which has led many to be hesitant to carry larger inventories as future leather demand remains uncertain. So, these sales of lower grain quality hides could be tanners only buying and storing hides due to the low prices. If this is the case, we may see another slowing of demand for these selections. It seems there continues to be a conflicting battle between higher slaughter numbers and an uncertain finished leather market which could lead to more uncertain times as we move closer to the end of the year.
Below is our feeling as to the current FOB plant values of seasonal average weight Big Packer Steer hides:
– Heavy Native Steer hides at $39.00 per piece, unchanged for the week.
– Butt Branded Steer hides at $36.00 per piece, unchanged for the week.
– Heavy Texas Steer hides at $27.00 per piece, unchanged for the week.
The USDA’s Export Sales Report for raw and wet blue cattle hides was released last Thursday, September 19th for the week ending Thursday, September 12th. The report showed that 607,700 pieces were sold for export during that week. This number is up from 434,900 pieces reported sold the prior week. China was the number one buyer taking 331,200 of the pieces sold.
The USDA estimated Federally Inspected Slaughter (FIS), for the week ending Saturday, September 21, 2019, was 658,000 head of cattle. This number is up from the 529,000 processed during the like week a year ago. Year to date the estimated FIS is up 1.1 % from a year ago.
Chinese tanners are again the largest buyers of U.S. raw and wet blue hides produced with their latest weeks purchase percentage reaching over 54%. The threat of the tariff increases on December 15 for hides exported from the U.S. remains a viable fear affecting the market every week. As we move into the fall season, leather orders remain lower than tanners anticipated and is keeping the raw material prices steady at best with weaker undertones. U.S. hide suppliers continue to press tanners for better pricing on new sales as well as pushing sales for lower quality hide productions. Until we see a better finished leather market, we expect continued pressure on all selections. Moving forward, it is expected more of the same, steady pricing on higher quality hides, and lower prices for lesser selections.
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