The trading levels last week for U.S. Steer hides remained unchanged, while the trading volume slowed slightly. U.S. Cow hide sellers were able to move prices up slightly on some selections, but for the most part, Cow hide prices also remained steady. The main reasons for the slowdown in U.S. Steer hide sales was that suppliers turned down any bids that were less than steady as they remained well sold ahead on all selections, excluding some of the Jumbo weight selections. Tanners continued to say that their profit margins are being squeezed between raw material cost and finished leather prices. It is not only the U.S. cattle hide prices that have crept up over the last month, but an overall global rise in raw hide and wet blue values. U.S. Federally Inspected Slaughter came down about 10,000 head last week from the prior week. Returning the FIS to around 600,000 head, which we understand is a level that can be expected for the next couple of weeks. As mentioned above, U.S. Steer hide prices were unchanged last week from the previous week. That leaves the FOB plant prices for seasonal average weight Big Packer Heavy Native Steer hides at $77.00 per piece and Big Packer Butt Branded Steer hides between $75.00 and $76.00 per piece. Calling the value of the Big Packer Heavy Texas Steer (HTS) hide selection remains elusive as the content and weight range of this selection varies from supplier to supplier. Also, the supply of the HTS hide selection has become limited over time because of plant closures and an increase in the number of HTS hides being put into the blue. Our guess as to the value of seasonal average weight HTS hides, one that would average 62/64 lbs., would be un-changed from our last week’s quote of between $67.00 and $69.00 per piece plant basis. For last week’s U.S. Cow hide sales, several of the Dairy Cow productions were traded at prices that were up $.50 to $1.00 per piece, while the majority of the other Cow hide selections remained steady.
The USDA’s Export Sales Report released on November 3, 2016 for sales made during the seven day period ending October 27, 2016, indicated that 676,300 U.S. hides and wet blue equivalents were sold for export during that period. This number is up considerably from the 582,500 pieces reported sold for export during the previous week. China was credited with booking 310,900 pieces or about 46 percent of what was sold during the 7 day reported period. Korea was also active taking 137,100 pieces.
The Federally Inspected Slaughter (FIS) for the week ending Saturday November 5, 2016 came in at an estimated 606,000 cattle. That number is down from the prior week’s revised estimate of 616,000 head processed. Year-to-date the FIS is up 5 percent or 1,215,000 head from the year ago.
If you believe that U.S. hide suppliers will change their asking prices on the offering list they release this week you must ask yourself, why would they? The published prices that have been marketed on offering lists have not been obtained as of yet, even as sale prices have moved slowly higher over the last few weeks. It seems like moving asking prices either up or down may send the wrong message to tanners. On the supply side, U.S. beef packers are making wonderful margins on the cattle they are currently processing. They have established a nice balance between live cattle prices and wholesale beef prices and their job now is to maintain that balance. One part of the equation needed to keep this balance between supply and demand is the number of cattle they process. So, we don’t look for a big move away from that 600,000 weekly slaughter number, except for some blips around the Thanksgiving holiday. Although it is the job of those who are marketing the hides to obtain the highest price possible, it is also their job to keep the product moving. For now hide prices are at levels that work for tanners and allow suppliers to keep moving what is necessary.
Quote
“That feeling when you absolutely flush an iron shot. Even after an incalculable number of swings in a lifetime, the purity of that experience never fails to thrill.”
– Alan Shipnuck
