THE HIDE MARKET – JUNE 1, 2015
The fact that last week was Holiday shortened did not help sellers of U.S hides. The volume of business booked was naturally lower as was expected due to the holiday week. The reports from tanners in China continued to be negative to the hide market. Ongoing reports of environmental problems that result in tanners being forced to suspend or reduce soaking numbers, still slow leather orders, and tight cash flow, are main issues restricting many of the Chinese tanners. In spite of this situation, Big Packers were able to maintain price levels on their Steer hide selections, even with reduced sales numbers. Korean tanners remained relatively active in the market, which helped sellers of Steer hides keep their sale prices level with the previous week’s numbers. Again, sales were limited and most likely did not meet production numbers for any hide selection, Steer or Cow. Sales prices for Steer hide sales remained steady at $95.00 per hide on Heavy Native Steer hides and $94.00 for Butt Branded Steer hides, both on an FOB plant basis. We did not hear of any confirmed sales of Heavy Texas Steer hides but we would expect any business that transpired was at or close to last week’s levels of $ 82.00 to $ 84.00 plant basis. The volume of business done on Dairy Cow hides was what we would call satisfactory for the holiday shortened week, and sale prices were no worse than steady with the prior week’s numbers. Dairy Cow hide producers continue to say that they are well sold ahead. Reported sales activity on the U.S. Plump Cow hide selections were limited. This we believe is directly related to the problems, some of which we mentioned above, that the Chinese tanners of these selections are struggling with.
The Export Sales Report released by the USDA on May 28, 2015 for sales made during the one week period ending May 21, 2015, showed that 478,900 cattle hides and wet blue equivalents were sold for export during the period. This number is down from the previous weeks reported sales of 511,800 pieces. China/Hong Kong was the number one buyer, taking 293,800 hides and wet blue equivalents. That number being just over 60 percent of the total sales report for the period.
The Federally Inspected Slaughter (FIS) for the week ending Saturday May 30, 2015 was an estimated 525,000 cattle, down slightly from previous week’s estimated FIS of 566,000 head. The FIS for that same week last year was 539,832 animals. Year to date the FIS is down 7 percent.
We will not be surprised if U.S. Steer hide suppliers come out this week asking higher prices for their hides. However, we think they will be more than satisfied, if by week’s end, they will have been able to move their offerings at prices that are steady with last week’s levels. One would think that there was just to many negatives coming out of China last week to expect hide prices to move higher this week. As mentioned above, Steer hide producers have for the last several weeks, been able to keep prices steady and hopefully they can get the job done again. There needs to be a good round of Plump Cow sales this week if suppliers hope to maintain current price levels. Unless demand from the Chinese tanners picks up, it will be hard for Plump Cow prices to hold their own. Dairy Cow demand looks to be in sync going forward, so we don’t expect to see much change in those prices. It is expected that U.S. Cattle slaughter numbers will be seasonally higher in June, but will continue on a weekly basis, to be below last year’s levels. Therefore, supply will not be a factor in moving hide prices higher or lower. It all comes down to demand.
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