THE HIDE MARKET – AUGUST 15, 2016
The activity in the U.S. hide market started slowly last week, but things really picked up by the end of the week. The main objective for U.S. hide suppliers was to put a bottom in the market. Although it cannot be said that the market bottomed out last week, suppliers did feel that the bottom was much closer by weeks end. While U.S. Steer and Heifer hide prices dropped down another $1.00 last week, producers reported that they sold what could be called decent volume. All of this has left those of us selling U.S. hides feeling much better about the market going forward. The U.S. Cattle slaughter last week continued the trend of weekly totals in the 580,000 range. Tanners last week, were still talking about the lack of leather orders, the split market, etc., but some tanners also said that they expect their leather business to pick up over the next few weeks. All in all last week was if nothing else, a stabilizer for the U.S. hide market. We are putting the FOB plant prices for seasonal weight Big Packer and equivalent productions Steer hides at the close of business on last Friday:
Heavy Native Steer hides $73.00 per piece, down $.50 for the week.
Butt Branded Steer hides $71.00 per piece, down $1.00 for the week.
Heavy Texas Steer hides $65.00 per piece, down $1.00 for the week.
According to reports, both the Native and Branded Heifer selections were traded down $1.00, or at steady money depending on origin. Trading of U.S. Cow hides appeared from all reports, to have slowed. The reason for the reduced number of sales was supplier’s resistance to accept the last traded levels for the Cow hides they had available for sale. Most Cow hide suppliers claim to be in well sold ahead positions, which resulted in them sticking to their higher asking prices. This resulted in limited sales of U.S. Cow hides last week. We heard from China that there were still a large number of European Cow hides being offered for sale, but that did not seem to affect the market for U.S. Cow hides.
The Export Sales Report published by the USDA on August 11, 2016 for sales made during the week ending August 4, 2016 indicated that 409,800 hides and wet blue equivalents were sold for export. This number is down considerably from the 595,300 pieces reported sold for export during the prior week. China was the largest buyer taking 231,700 pieces followed by Italy who booked 85,200 pieces of which all but 2,400 were wet blues.
The Federally Inspected Slaughter (FIS) for the week ending Saturday August 13, 2016 was estimated at 581,000 cattle. This number is slightly higher than the estimated 579,000 head processed the previous week. Year-to-date cattle slaughter is an estimated 18,191,000 animals up 3.9 percent from a year ago.
We expect when the Korean tanners return to work tomorrow they will be surprised to find the U.S. hide market in much better shape than it was when they went on their Summer holidays last week. One would have to believe that the volume of business done by U.S. hide suppliers last week was enough to have them feeling much better about the market going forward. Sure, things are not all rosy for the hide and leather industries, but they are looking better today than they were a week or two ago. Our feeling is that leather business will begin to improve as it normally does moving toward September. U.S. Steer hide prices have come down over the last six weeks, to last year levels. U.S. Cow hide prices are currently well below a year ago levels, with some of the U.S. Cow hide selections being down around 25 percent from a year ago. We feel U.S. hides are cheap enough to allow tanners to make a profit, if and when they can put some leather orders on the books. Has the hide market bottomed? If not, it is very close.
More Mulligan’s Laws
Good sportsmanship is as essential to the game of golf as good penmanship is to stock car racing.
The more your opponent stresses the importance of etiquette, the better the odds that he will sneeze in your backswing.
