Busy, busy, busy- that is the only way we can describe last week’s U.S. hide market. From start to finish, tanners and U.S. hide suppliers were going back and forth with offers, bids, counters, and re-counters, while finally coming together on a good amount of business. From what we saw, sale prices last week for both Steer and Cow hides advanced anywhere from $1.00 to $1.50 per piece. Where the week prior to last was a very active one for booking business, last week’s sales were also considerable in number. Last week opened with carryover business from the prior week and continued at a good pace right through last Friday. Tanners in Asia continued to say that their business is not good, that leather prices were lagging behind hide prices, and their profit margins are too small. So why have they been such active raw material buyers over the last weeks? Well obviously, they do have some leather orders, and they are buying hides to cover those orders and the future leather orders they anticipate coming. It has also been mentioned that some tanners were buying hides now to avoid weather damaged winter hides. Cattle slaughter here in the U.S. continued its recent pace last week, and we don’t expect any surprises as we move into November. Beef packers are making some nice profits operating at their current slaughter levels, so one would doubt they would want to make any changes that would destroy the balance they have been able to maintain between the number of animals they process and the demand they have for meat. As mentioned above, U.S. Steer hide prices moved higher again last week with the seasonal average Big Packer Heavy Native Steer hide reported to have sold as high as $76.50 per piece, FOB plant basis. That moved their value up $1.00 from the prior week. Big Packer Butt Branded Steer hides were reported to have been traded as high as $75.00 per piece, which is also up a full $1.00 from the top of our previous week’s quote. Although Big Packer Heavy Texas Steer hides were reported to have sold for as high as $71.00 per hide FOB plant, it should be remembered that sale was for hides with a very heavy average weight range. Sale prices for U.S. Cow hides were mostly steady on the Plump, and maybe a tad higher on some of the Dairy productions.
The USDA’s Export Sales Report for the week ending October 20, 2016 for sales made during the seven day period ending October 13, 2016, indicated that 661,300 U.S. hides and wet blue equivalents were sold for export during that week. This number is up considerably from the 461,700 pieces reported to have sold for export during the preceding week, and it is important to remember, contained a holiday week in China and a holiday in Korea. China was last week’s big buyer taking 445,200 units or about 67% of the sales.
The Federally Inspected Slaughter (FIS) for the week ending Saturday October 22, 2016 was estimated to be 602,000 cattle. This number is almost identical to the estimated 601,000 cattle packers processed the prior week. Year-to-date the FIS is up 1,113,000 head or 4.8 percent from a year ago.
We have to think that things in the U.S. Raw hide and Wet Blue hide market will slow this week. Coming off a couple of very active weeks, we expect both supplier and buyers are in more of a comfortable position. Suppliers have increased their sold ahead positions, and tanners have put on some ownership. We expect suppliers will be looking for higher prices on the fewer hides and wet blue they have to offer this week, and we expect some stronger resistance by tanners to higher asking prices than we have seen over last number of weeks. Also, we have to believe that the recent appreciation of the US Dollar against the Chinese RMB may well be a deterrent to the Chinese tanners being very active in the U.S. hide market for now. Have a great week.
Golf One-Liners
When the golf pro told his student she was only average, he was being mean!
Ever wonder what professional golfers do after they retire?
