Steer hide prices came under pressure last week as the lack of Steer hide sales over the last month and the shipment delays requested by the Chinese tanners finally caught up with the market. China’s problems including environmental issues, and reduced leather orders from Chinese leather goods manufacturers who produce for the Chinese domestic market, continued the decline in drop split values and have negatively affected a large number of the Chinese tanners. All these factors have resulted in reduced cash flow for these tanners. There were many rumors floating around the hide industry regarding different tanners and about sales being made by some U.S. Steer hide sellers at prices below what were considered current market levels. The rumored lower priced sales were in most cases attributed to suppliers making these new sales at price levels that would allow their tanner customers to average down the per piece cost of their outstanding unshipped orders. Although, It is likely that at least some of the rumored lower priced Steer hide sales would be new sales based on the lack of contracts conceived over the last month or so. More alarming are the rumors that in China some “less scrupulous” tanners are re-negotiating contracts. One would think that any unethical maneuvers by “less scrupulous” tanners will result in some serious ramifications going forward. With markets there are always changes. The sales prices that were reported by packers and dealers at the end of last week for Big Packer Heavy Native Steer hides were $90.00 and $92.00. Big Packer Butt Branded Steer hides were priced at $88.00 and $89.00 per hide, both on an FOB plant basis and down $1.00 to $3.00 per piece from a week ago. Reported sales prices for Big Packer Heavy Texas Steer hides were $79.00 to $80.00 plant basis. There were a number of Plump Cow hide trades reported and the sale prices on those reported sales were down $1.00 to $2.00 per hide. Dairy Cow hides continue to move at a steady pace, but again the sale prices that were reported, were down $1.00 to $2.00 from sales made the previous week.
The Export Sales Report released by the USDA on June 11, 2015 for sales made during the week ending June 4, 2015, showed that 462,800 cattle hides and wet blue equivalents were sold for export. This number was up a little from the previous weeks reported sales of 432,300 pieces. China/Hong Kong was the number one buyer, taking 245,500 hides and wet blue equivalents. The China/Hong Kong purchases accounted for just over 53 percent of the total sales report for the period. Korea was the second place buyer taking 134,900 pieces.
The Federally Inspected Slaughter (FIS) for the week ending Saturday June 13, 2015 was estimated to be 542,000 cattle, down slightly from the previous week’s estimated FIS of 550,000 head. The FIS for that same week last year was 605,629 animals. Year to date the FIS is down 7.2 percent or 987,000 head.
This week starts with the U.S. Steer hide market looking for a bottom. The above mentioned problems in China continue to hang over the market. Will this week be the turnaround week, when enough sales are made to stabilize the Steer hide market? For that to happen, the Chinese tanners have to step in and buy some raw material. Just as importantly, the Chinese tanners need to live up to their contractual agreements, and take delivery of the hides and wet blue they have on the books with suppliers. Rumors of contract renegotiation and cancellations can only hurt all involved. This will be an interesting week.
Dave Feherty-Golf Announcer at work
- At Augusta 2011 – “It’s a glorious day. The only way to ruin a day like this would be to play golf on it.”
- “That was a great shot – if they would have put the pin there today.”