With many of the Asian tanners slipping into a holiday mood last week, trading of U.S. raw and wet blue cattle hides seemed to have slowed down. We do not believe that sellers, as a whole, were able to move a full week’s production of either their raw or wet blue material. Although there were not a lot of trades consummated, some selections, notably Big Packer and equivalent Heavy Native, Butt Branded, and Colorado Branded Steer hides, were reported to have been sold at higher price levels. Those price levels were said to have been up by as much as $1.00 per piece. Even with the fewer number of bids and ultimately a few number of sales last week, most U.S. cattle hide suppliers seemed to remain comfortable in the market. They appear to be happy with their sold ahead positions and were satisfied with the flow of product, pace of shipments and the large number of sales reported in the USDA Export Sales Report released last Thursday for orders booked the previous week. Also, buoying U.S. hide and wet blue seller’s attitudes were rumors last week that indicated that there were, in Asia, a fair number of leather orders pending, in negotiation. The rumors indicated that these orders that would presumably be booked shortly after the Chinese New Year holidays. On the other side of the pending leather orders was the statement that profit margins for any leather orders that would be booked would be done with very tight profit margins for tanners. Last week’s cattle slaughter here in the U.S. again stayed below the 600,000 head level. This continues to be, as it was the prior week, a result of negative profit margin for U.S. beef packers. The USDA tells us that cattle slaughter in the U.S. will increase by a percent to tow in 2017 over 2016. But, weekly harvest numbers (FIS) will vary with the relationship between live cattle prices and beef and offal prices. So there will be ups and downs in the weekly cattle slaughter numbers. Because of the increase in the Plump Steer hide prices last week, we are moving our quote for the Fed Beef type hides up a notch. As a result, we are moving the price for seasonal average U.S. Big Packer Heavy Native Steer hides up to $76.00 per piece and we are pushing the value of the U.S. Big Packer Butt Branded Steer hide up to $74.00 per piece both prices FOB plant basis. We are going to leave the value of the seasonal average Big Packer Heavy Texas Steer hide selection at $71.00 per hide plant basis. Sales of U.S. Dairy Cow also slowed further last week the drop off we attribute to fewer being offered and the holiday slow down. Conversely, demand for U.S. Plump Cow hides both Native appeared to increase last week. Demand for these two selections had trailed that of Dairy Cow hide for a number of weeks.
The USDA’s Export Sales Report released on January 26, 2017 showed net sales of 708,700 U.S. cattle hides and wet blue equivalents for the seven day period ending January 19, 2017. This large number is up from the healthy 618,100 pieces reportedly traded the prior week. And this report also indicated that China took 403,800 units or almost 57 percent of product sold.
The Federally Inspected Slaughter (FIS) for the week ending Saturday January 28, 2017 was estimated to have been 577,000 cattle, down from the prior week’s estimated 569,000 head processed and the 570,000 processed for the same period last year.
We look for this week to be a quiet one for the U.S. raw hide and wet blue hide markets. Because of the Lunar New Years, Korean tanners were closed last Friday and today (Monday). And the Chinese tanners will be down for basically all this week though some will be back in their offices on Thursday or Friday of this week. We expect slaughter here in the U.S. to remain under the 600,000 number again this week as packer’s margins are again expected to remain in the red. We do expect that any U.S. raw hides and wet blues that are traded this week will be at steady price levels or darn close to them. A good percentage of the tanner customer base will be absent from the market and sellers from our vantage point don’t need to rush and selling anything in volume. Tis the year of the Rooster, don’t chicken out.
Mulligan’s Laws
Whatever you think you’re doing wrong is the one thing you’re doing right.
If the wind is in your face, you swing too hard just to get the ball through it; if the wind is at your back, you swing too hard just to see how far you can get the ball to go.
