Things were fairly quiet last week for the U.S. hide market. There was just enough buyer interest for the Steer hide selections when coupled with the lack of availability from the supply side, to keep the prices within a dollar of their previous trading ranges. The buyer interest on the Steer hides has been much more wide spread over the last few weeks. What we mean, is that the Chinese tanners have not been taking as large a percentage of the sales as we have become accustomed to seeing. Instead, we have seen a larger percentage of the sales going to destinations other than China. This however did not translate into any kind of volume for U.S. Steer hides being traded. The week after the Asian Pacific Leather Fair pretty much reflected the show week. Tanners continued to complain about the lack of leather orders, but many of them remained short on raw material inventory, and therefore were forced into the market to secure some hides or wet blue. So, we will continue to call the FOB plant U.S. Big Packer Steer hide prices to be: $74.00 to $75.00 per hide on Heavy Native Steer hides, $72.00 to $73.00 per hide for Butt Branded Steer hides and maximum $67.00 for Heavy Texas Steer hides. Cow hide prices were a little softer last week, down another $1.00 per piece, continuing their recent slow decline in value. Many relate this weakness in Cow hide prices to the problems in the Hebei area of China where a good number of Cow hides are tanned. Those problems include seasonal leather demand, lower drop split prices, and cash flow.
The Export Sales Report released by the USDA on April 7, 2016 for sales made during the week ending March 31, 2016 showed net sales for export of 343,700 cattle hides and wet blue equivalents. This number is down from the 375,800 units traded the prior week. China was the leading purchaser booking 169,600 pieces while Korea which bought 68,800 hides and wet blue equivalents were the second place buyer.
The Federally Inspected Slaughter (FIS) for the week ending Saturday April 9, 2016 was an estimated 535,000 cattle, down from the prior week’s estimated FIS of 542,000 animals. For the same time frame last year the FIS was 503,573 head. The Year-to-date FIS cattle slaughter is estimated to be 7,712,000 cattle which is .6 percent above last year’s FIS to date.
What will happen to U.S. Steer hide values this week? We think they will remain in the same trading ranges that they have been in for the last few weeks. Supply will remain tight as fat cattle processors will continue to struggle to operate in the black, and therefore will be operating at reduced slaughter levels. Therefore, the lower fat cattle slaughter number will extend suppliers sold ahead positions on their hide productions. This may be a temporary situation but it is the current situation. Steer/Heifer tanners may try and buy hides at lower levels, because their leather orders are not as large as they were last year at this time. They do have orders, and they do need to secure raw material sources for those orders. U.S. Steer/Heifer hide prices are off by more than 25 percent from a year ago, and production is up only six tenths or just .6 percent year to date. It is hard to make a case for any dramatic move in Steer/Heifer hide and wet blue prices. Cow hides? Even with prices down from a year ago by more than 30 percent on average for the Cow hide selections, there was not enough interest in the market place last week to clean up the product offered. Maybe we will get some good news regarding the activity going forward for the furniture upholstery business when the High Point Show gets underway. That show is not scheduled to start until this coming Saturday. It looks like the U.S. Cow hide selections will continue to search for demand. To recap our thinking or guessing, we look for this week’s U.S. hide market to mirror last week. There will be enough Steer/Heifer business to keep prices steady at the packer level. Cow hide prices will be dependent upon finding more buying interest.
Brotherly love
Tweets to Danny Willett from his brother P.J. while Danny was playing the final hole at yesterday’s Masters.
- “Just Hit The Green….Please.”
- “Three putt this & you might as well stay in America.”
- “Green makes you look fat, refuse the jacket.”
