It appears things picked up a bit in the U.S. Cattle hide market last week, though it was not the big week we were anticipating numbers-wise. Maybe packers, processors, and traders did not have combined sales equal to a week’s production, but it was a decent week of trading. In the process, sellers of U.S. Steer hides could hold prices steady and in a few cases, on certain heavy average selections, they could get buyers to pay as much as $1.00 per piece higher. At the same time, sellers of U.S. Cow hides reported moving a limited number of hides at steady to a $1.00 per piece higher. Again, these limited higher priced sales, like those for Steer hides, were on specific selections/productions. Cattle slaughter last week in the U.S. was well under the 600,000-head number and virtually unchanged from the prior week. Tanners in Korea continued to lament the lack of leather orders in the market there. Tanners in China complained that they could not budge the sale prices of finished leather, preventing them from being able to pay higher prices the for raw hides or wet blue material that they need to fill the orders. The explanation from most of those involved in the trade was that, because of limited ownership, tanners in Korea, China and elsewhere around the world who use U.S. hides are forced to buy at steady to higher prices from well sold ahead U.S. suppliers. Additionally, the reports that came in from last week’s Lineapelle Leather Fair in Milan were mostly positive for tanners. So, this bodes well for the international raw material suppliers. For the week on whole, we are going to stay with our last week’s quote of $78.00 for the FOB plant value of the seasonal average weight U.S. Big Packer Heavy Native Steer hides. We will also stick with our $76.00 per piece FOB plant quote for the seasonal average weight U.S. Big Packer Butt Branded Steer hides. There were mixed reports on the Big Packer and equivalent Heavy Texas Steer hide selection. But, the trend on the sales reports were higher so we are moving what we estimate the FOB plant price of the Heavy Texas Steer hide selection up $2.00 to $73.00 per piece
The USDA’s Export Sales Report released on February 24, 2017 showed net sales of 582,200 U.S. cattle hides and wet blue equivalents for the 7-day period ending February 16, 2017. This number is up about 33 percent from the 437,400 pieces reported to have been sold for export the prior week. China was credited with buying 284,000 of the pieces sold making it again the number one buyer. Korea was reported to have purchased 80,200 pieces all raw hides, while Italy was reported to have bought 77,900 units all of which were wet blues.
The Federally Inspected Slaughter (FIS) for the week ending Saturday February 25, 2017 was estimated to be 575,000 cattle, which was almost identical to the 572,000 cattle processed the previous week. For the same period, last year, the FIS for cattle was 540,653 head. The Year-to-Date cattle slaughter is up by 159,000 animals or 3.6 percent for the same period last year.
Will this be the week where we see U.S. raw hide and wet blue sellers put together a large volume of business with their tanner customers around the globe? We continue to think that a good round of business is in the cards, but maybe we are wrong. We are moving toward the Asian Pacific Leather Fair, which will be held in Hong Kong the last week of March, and the traditional supplier travel that usually surrounds that show. Maybe we will continue to see what appears to be a reasonable, but not large, amount of business being put together on a weekly basis over the next few weeks. We do feel that if there is room for a good round of business, it would be on the Plump Steer/Heifer production. And, even though we feel like U.S. Cow hide values have reached, or are close to reaching, the top of the recent trading range, it appears to us that Cow hide suppliers are just too far sold ahead to warrant selling more than a week’s production.
Have a good week.
Mulligan’s Laws
The inevitable result of any golf lesson is the instant elimination of the one critical unconscious motion that allowed you to compensate for all of your errors.
