As expected, things slowed in the U.S. Hide Market last week. While the number of hides offered by suppliers decreased, and the number of orders from tanners was reduced, the sale prices for the product traded either remained at steady levels or moved slightly higher. Lower grading selections such as Branded Cow, Renderer, and Number Three hides struggled, but did maintain their prices levels. It was the Big Packer Steer hide selections, and the more sought after Dairy Cow hide productions, that were able to eke out price increases of anywhere from $.50 to $1.50 per piece. Even though the price was steady on some selections and up on other selections, because of the decrease in number of hides sold, we would have to call the market softer. The strong U.S. Dollar was mentioned by a number of our tanner customers as being a consideration as they pondered their raw material purchasing plans last week. Certainly, the Dollar’s depreciation would have a negative impact on Asian tanners who are making leather for products intended for sale in their domestic markets. Cattle slaughter here moved up last week to a little higher level than we had anticipated. We are told that it should hang closer to the 600,000 head per week level going forward. The FOB plant price for the Big Packer Heavy Native Steer hide was well established at $77.00 per piece last week, moving it up by $.50 from its high of the preceding week. There were some rumors that some Big Packer Butt Branded Steer hides were being traded for as high as $76.00 per piece, which would put them up $1.00 from their prior week’s price level. We did not hear much about sales activity on Big Packer Heavy Texas Steer hides, so we are calling the value of the seasonal average weight classification for this selection to be between $67.00 and $69.00 per piece plant basis. As mentioned above, there were a few Dairy Cow productions that suppliers were able to squeeze out $1.00 or more in price increases, while the bulk of the Cow hides that were sold last week were done at steady money.
The USDA’s Export Sales Report for the week ending October 27, 2016 for sales made during the seven day period ending October 20, 2016, indicated that 582,500 U.S. hides and wet blue equivalents were sold for export during that period. This number is down from the 661,300 pieces reported sold for export during the prior week, but still a very healthy number for the market. On the other hand, China booked 73 percent of the pieces sold last week which is not very healthy for the market.
The Federally Inspected Slaughter (FIS) for the week ending Saturday October 29, 2016 came in at an estimated 613,000 cattle. That number is up more than expected from the prior week’s estimated 602,000 head Harvested. Year-to-date the FIS is up 5 percent or 1,170,000 head from the year ago number.
We have not heard a lot about the level of sales activity by U.S. wet blue hide suppliers recently. We do understand that there are changes taking place in how the Big Three U.S. producers will make, and market their independent productions. We do know that one of those big wet blue suppliers has recently retained a knowledgeable individual from the U.S. hide industry for the position of Vice President of Sales. This has to be a positive for their organization, and in the end, for all U.S. wet blue hide suppliers. We expect the supply and demand equation to remain in balance this week, with any change in raw hide values up or down to be minimal. The FIS is expected to remain in its current range, and we expect interest from tanners to also be maintained at recent levels. Currency exchange rates are the wild card for some of our export destination tanners, and may influence if they buy raw material this week or not. Happy Halloween, have a good week.
Golf Quote
“You have to make corrections in your game a little bit at a time. It’s like taking your medicine. A few aspirin will probably cure what ails you, but the whole bottle might just kill you.”
– Harvey Penick
