THE HIDE MARKET – DECEMBER 19, 2016
Far and away, the majority of bids from Asian tanners last week on U.S. Plump Steer hides were at levels down $1.00 to $2.00 per hide from sales made the week before last. As a result, the number of Plump Steer hide sales made was less than a week’s production. The final sale prices for some of the U.S. Plump Steer hide selections finished the week down a dollar from their previous week’s closing values. However, there were some Plump Steer hide sales made at steady money. At the same time, sale prices for the Dairy Steer hide and all the Cow hide selections appeared to have traded at what we would call steady money. Interest in these selections was far more visible than that for the Plump Steer hide selections. Although fewer in number, there continued to be comments from Asian shoe and handbag leather tanners that there are simply not enough leather orders to go around and that competition for those orders make profit margins more than tight. We are told that drop split prices in China have improved, so there is a little good news for tanners. Rumors that some Big Packers and some traders sold hides out front or short was again a topic of conversation in the trade last week. Most likely some of those rumors were based on fact, but the details of these trades may be hard to put a finger on. Cattle slaughter here in the U.S. remained consistent last week, running just a little under the 600,000 head number as expected. Based on the business that we know was conducted last week, we are moving what we consider the FOB plant market price for seasonal average U.S. Big Packer Heavy Native Steer hide selection down to $75.00 per piece. We are going to leave the Big Packer Butt Branded Steer hide price range unchanged at between $71.00 and $72.00 per piece FOB plant basis. Heavy Texas Steer hides were reported to have sold again last week at $68.00 per piece plant basis. As we mentioned above demand for U.S. Cow hides continued to be steady as did their supply. So, FOB plant sale prices were also steady.
The USDA’s Export Sales Report released on December 15, 2016 for sales made during the seven day period ending Dec. 8, 2016, stated that 495,900 U.S. hides and wet blue equivalents were sold for export during that week. This number is up just slightly from the 493,400 pieces reported sold for export during the prior week. Both sales numbers for the last two weeks are net after reported cancellations, which have been occuring every week. The cancellation numbers for the last two weeks have been quite large, reflecting sellers cleaning up of their books as we approach year end.
The Federally Inspected Slaughter (FIS) for the week ending Saturday December 17, 2016 was estimated to be 599,000 cattle, down from the prior week’s 611,000 head. For the same week last year the estimated FIS was 580,000 animals. Year-to-date the FIS is up 5.6 % or 1,529,000 head from a year ago.
Today marks the start of the year-end holiday season here in the U.S. As of today, things will start winding down and by Friday of this week many offices will be short staffed as people will have started to head home to spend time with their family and friends. Cattle slaughter this week is expected to slow as we move toward the following two weeks. This will mean lower slaughter numbers because each contains a one day national holiday closure. Packer profit margins remained firmly in the black, so after the coming holiday forced decline in slaughter, we expect the FIS numbers will pick up again. Not that the market has had any problems absorbing the U.S. raw hides that have been available while the slaughter number has been running at the 600,000 head weekly pace. Hope you have a good week.
Golf Quotes
“You must attain neurological and biological serenity in chaos. You cannot let yourself be sabotaged by adrenaline.”
– Mac O’Grady, on playing good golf.
“Thinking instead of acting is the No.1 golf disease.”
– Sam Snead
