THE HIDE MARKET – JUNE 27, 2016
Things slowed somewhat last week in the U.S. hide market. That had to be expected after the reported pace of business the previous two weeks. Even with the decline in the number of hides and wet blues booked, sellers were by week’s end, able to keep their sale prices steady and in some cases and on some selections to push their sale prices a little higher. Still, the complaints by many tanners around the world continued to be lackluster leather orders, little or no profit margins, and poor cash flows. Even the auto upholstery tanners, who for some time have been the busiest of the leather makers, are complaining that their business is becoming increasingly difficult. They see slowing demand due to fewer cars being produced, and less leather being used per car along with very stiff competition for the existing business. U.S. cattle slaughter last week was as expected above 600,000 animals, which is at the high end of what we can expect in a weekly slaughter number for the rest of the year. In spite of these negatives to hide prices, the market remained on the firm side. Better grain quality hides continued to be in the greatest of demand while the lower grading selections, such as Southwestern Branded Cow hides, continued to find it difficult to attract buyers. As for last week’s raw hide sale prices, we would put the value of the seasonal average weight Big Packer Heavy Native Steer hide at $76.00 to $77.00 per piece FOB plant, up $1.00 from our prior week’s quoted range. We are pegging the Big Packer Butt Branded Steer hide value at $75.00 per unit FOB plant basis, which is at the high end of our previous week’s quoted range for this selection. There were during last week, Big Packer seasonal average Heavy Texas Steer hide sales reported sold for as high as $74.00 per piece, which is up $1.00 from the high end of last week’s price range. Some of the Heavy Texas Steer Hide sales that have recently been reported are a bit perplexing. There was a fair amount of buyer interest in U.S. Cow hides last week. Suppliers were able on some of the more desirable Dairy Cow hide productions to get some marginal price increases. On a whole, we would call the market for both the Plump and Spready Cow hide selections steady.
The Export Sales Report published by the USDA on June 23, 2016 covering sales made during the week ending June 16, 2016 stated that 511,000 hides and wet blue equivalents were sold for export during that 7 day period. This number is down from the prior week’s 572,500 pieces sold for export. China was leading purchaser taking 281,800 of the pieces sold. Korea was the next largest buyer with 114,800 pieces booked.
The Federally Inspected Slaughter (FIS) for the week ending Saturday June 25, 2016 was estimated to be 611,000. The Year-to-date FIS is now an estimated 14,135,000 head up 2.8 percent from a year ago.
There was a lot of tanner resistance last week to U.S. supplier’s higher asking prices for their raw hides and wet blues. Our feeling going into this week is that that buyer resistance will carry over into this week and may result in a standoff between suppliers and buyers. With producers saying that they are well sold ahead and tanners saying they cannot justify current hide prices it may take some time before the two sides put some business together. We understand that the U.S. weekly cattle slaughter will continue to run a little over 600,000 head a week for the next week or two before dropping back below that 600,000 mark. This may give tanners added incentive to stay stubborn on what they will pay for raw material. However, one would think that packers and dealers have already put their estimated production numbers into their sales positions, and still feel well enough sold ahead to be stubborn and hold their price ideas. It will be interesting to see where prices do land. It is good to remember that the U.S. hide market has been on the firm side for a good six weeks now, and markets by their nature like to move both higher and lower. Have a great week.
Mulligan’s Laws
- A ball hit into the rough will always disappear between two identical shrubs.
- For most golfers, the only difference between a one-dollar ball and a three-dollar ball is the two dollars.
