Last week was a big one for U.S. Cattle hide and wet blue producers and sellers. It seemed as if tanners, mainly in Asia, finally came to the conclusion that U.S. hide prices were not going to soften in the near term. They felt that they had better enter the market now or pay more for any U.S. raw material they will need in the near future. The biggest indicator of a firm U.S. hide market were the well sold-ahead positions of many suppliers, which was indicated by the offering lists sent out last week. Tanners continued to complain that neither the price nor quantity of their leather sales could justify higher hide prices. But the fact is, higher prices were paid. It appears that tanners, particularly in Asia, have enough interest in the full grain leathers they produce, but few orders for corrected grain material. Whatever the reasons, the price spread between good grain quality hides and the poor grain quality raw material is large from an historical standpoint. As for the FOB plant prices for the Seasonal-Average U.S. Big Packer Steer hide selections at the close of business last Friday, we would put them as follows; Heavy Native Steer hides $75.00 to $76.00 per piece, and we would put the Butt Branded Steer hide selection at $74.00 to $75.00 per hide both prices up $1.00 per piece from the previous week. The Heavy Texas Steer hide selection is gaining some ground based on the fact that more recent reports from tanners indicate that this selection is grading better than the recent deliveries of the River point Plump Steer hide selections. Because of this recent interest in the HTS hides, we are moving their FOB plant value up to between $69.00 and $73.00 per hide, a full $1.50 up from the prior week’s level. Interest in U.S. Cow hides, like their Steer hide counter parts, intensified last week, with sales made on all selections from steady money to up from $1.00 to $2.00 per hide. Our guess is that the high Steer hide prices are taking the Cow hide values up with them.
The Export Sales Report published by the USDA on June 16, 2016 covering sales made during the week ending June 9, 2016 showed that 572,500 hides and wet blue equivalents were sold for export during that period. This number is up a bit from the prior week’s 519,700 pieces sold for export. China was far and away the biggest buyer booking 380,800 pieces or about two/thirds of the pieces sold during the week.
The Federally Inspected Slaughter (FIS) for the week ending Saturday June 18, 2016 was estimated to be 603,000 cattle. The Year-to-date FIS is now an estimated 13,518,000 head up 2.5 percent from a year ago.
We look for U.S. Cattle hide prices to continue moving higher this week. Based on suppliers sold ahead positions, it does not look like it will take much buyer interest to propel Raw hide and Wet Blue hide prices higher. Last week’s cattle slaughter number was as high as we have seen for some time, and to process that many animals packers have to pull lighter cattle from the feed yards. This trend may continue for a few more weeks as packers processing margins remain positive. There are only so many fed cattle available, and the slaughter of these animals is expected to decline a little in July and August. Cow slaughter in the U.S. we understand, is expected to remain steady. It is also good to recall that U.S. hide suppliers are now offering hides that will deliver in August and September, which is the time of the year when the quality of the U.S. hide production improves. Do we expect U.S. hide prices to jump up dramatically this week? No, but on the other hand, we see no chance that U.S. hide values will decline for now. Let’s see what this week brings.
Golf Quotes
“Golf is a day spent in a round of strenuous idleness.”
– William Wordsworth
“It’s good sportsmanship not to pick up lost golf balls while they are still rolling.”
-Mark Twain
