Activity in the U.S. Cattle hide market was almost nonexistent the first few days of last week. By the time we got to Thursday, it was apparent that the week was not going to be a big one for the U.S. hide market. Part of that was, for sure, the fact that both China and Taiwan were closed on Monday enjoying their “Dragon Boat Festival” public holiday. As the week progressed, it seemed that all posturing and media reporting on the possibility of a trade war and impending tariffs seemed to have more of an effect on the market than the holiday. Some Chinese tanners said they did not want to buy any U.S. origin hides for the fear that tariffs may be put on them by their government. Other Chinese tanners were said to be delaying shipments because of the possibility of tariffs. For many in the trade, the delayed shipment requests were more related to the market and not any real threat of tariffs. In fact, as is well known to all involved, hides and skins are not on China’s list of items that may be subject to tariffs. From our vantage point it appears that the U.S. Steer hides that were traded last week were priced at levels which we would call steady to down $1.00 from the prior week’s transactions. On the other hand, sale prices for Heifer hides, both Native and Branded, moved down by $1.00 to $2.00 per piece. The production of Heifer hides has increased putting more of them on the market. Sales of U.S. Cow hides may have been more limited last week than the sales of the Steer hide selection. There were some low Branded Cow hide bids floated into the market by some tanners. Those bids, as far as we could tell, were countered by suppliers and many of those counters were subsequently passed by buyers. The Export Sales Report that the USDA released last Thursday for the prior week showed that a good number of raw and wet blue hides were sold for export during that period. The USDA’s last estimated Federally Inspected Slaughter number for last week came in at what some people in the Beef industry say will be the largest weekly number of 2018.
Based on the sales that were reported we are making the following quotes on the FOB plant values for the seasonal average weight Big Packer Steer hide selections as follows:
- Heavy Native Steer hides at $59.00 per piece, which is no change from our last week’s call.
- Butt Branded Steer hides at between $47.00 to $49.00 per piece, down $1.00 for the week.
- Heavy Texas Steer hides between $37.00 to $40.00 per piece, down $.50 per piece for the week.
The Export Sales Report released by the USDA on June 21, 2018, for the week ending Thursday June 14th. showed that 638,200 whole cattle hides, and wet blue equivalents were sold for export during period. That is up from the 535,400 pieces reported to have been traded the prior week. China was the big buyer taking 297,400 of the pieces sold. The second biggest buyer was Thailand purchasing 142,200 of the pieces sold.
Federally Inspected Slaughter, (FIS), for the week ending Saturday June 23, 2018, was the largest of the year coming in at an estimated 664,000 cattle. Year to Date FIS is an estimated 15,425,000 head, which is up 3.1 percent from a year ago.
The U.S. hide market stumbled along last week as prices for all selections continued their slow decline. Heavy Native Steer hides and some of the Holstein Steer and Cow productions have been able to hold their value more than the plump Branded Steer and Cow hides. However, we can say, that all the U.S. hide selections have suffered losses in their worth to a point that we would say they are currently at bargain levels. We are guessing that all involved in the equation, producers, processor, traders, tanners and leather product makers, would love to see the U.S. hide market stabilize. That, we feel, would activate all parts of the chain resulting in a big shot of business for all sectors of the fore mentioned equation.
MAC O’GRADY ON GOLF
“You must attain a neurological and biological serenity in chaos. You cannot let yourself be sabotaged by Adrenalin.” Yeah right Mac!
