There was a fair amount of business done on U.S. hides last week. The volume of trades was up from what was done during the previous holiday shortened week. But on a whole, last week left sellers nothing to shout about. There were many bids which is normally a good sign, but far too many of those bids were on items that suppliers were well sold ahead on or were at price levels that were not interesting to suppliers. For the most part, Steer hides that were sold were down a dollar or two from recent sales levels. This was mainly because the news out of China continued to be a negative to the market. It seems, the Chinese government is stepping up the pressure on tanners who are not doing the right things environmentally. This is a good thing of course in the long run, but it will continue for the nearer term to reduce the tanning capacity in China. These environmental issues could well force Chinese tanners to buy more Wet Blue hides and Crust leather and also should move some leather orders out of China to other tanning areas such as Korea and Taiwan. Chinese tanners also say that cash flow is a problem for them, complaining that their leather sales have slowed and that their banks are decreasing their credit lines. This is hard to understand as one keeps reading that the Chinese government continues to pour money into the banking system to stimulate their economy. As of last Friday we would say the Big Packer Heavy Native Steer hide price was $92.00 to USD 94.00 and we would put the Big Packer Butts Branded Steer hide price at between $90.00 and $91.00 per hide, both on an FOB plant basis. Big Packer Heavy Texas Steer hide price were report at $ 81.00 to $ 83.00 plant basis. As for Cow hides, we must call Dairy Cow hides the bright spot as demand at least matched production and sale prices remained steady. Plump Cow hide suppliers found a few more buyers in countries other than China which was dead on these selections.
The Export Sales Report released by the USDA on June 4, 2015 for sales made during the holiday shortened week ending May 28, 2015, showed that 432,300 cattle hides and wet blue equivalents were sold for export during the period. This number is down from the previous weeks reported sales of 478,900 pieces. China/Hong Kong was the number one buyer, taking 208,300 hides and wet blue equivalents. That number being just over 48 percent of the total sales report for the period. Korea was the second place buyer taking 80,000 pieces.
The Federally Inspected Slaughter (FIS) for the week ending Saturday June 6, 2015 was estimated to be 550,000 cattle, up from previous holiday shortened week’s estimated FIS of 525,000 head. The FIS for that same week last year was 616,467 animals. Year to date the FIS is down 7.1 percent or 923,000 head.
Can the U.S. Steer hide suppliers hold the market together without a good round of buying from China? It has been a waiting game, a tug of war for the last few weeks. Without a good round of buying from China soon, it is hard to see how Steer hide suppliers can hold things together. Supply, as last week’s FIS number showed, is not going to put much pressure on hide sellers, but continued slow sales to the Chinese tanners will. One would have to think that raw material inventory numbers for many of the Chinese tanners have to be getting pretty low, they have not been big buyers for over a month now. Will this be the week the Chinese tanners re-enter the hide market? That is the big question for this week.
Dave Feherty-Golf Announcer at work
- “It would be easier to pick a broken nose than a winner in this group.”
- “It’s OK – the bunker stopped it.”
- “That’s a great shot with that swing.”