The hide market last week continued to move along slowly, with tanners and suppliers having a hard time coming to a consensus as to where the hide market currently stands. From the tanner’s side, they can only see that their finished leather price cannot support these higher raw material prices that they have seen since the beginning of the year. On the side of the supplier, it can be said that the actual market price is steady with no change in prices. The reason for that is twofold, suppliers had moved their positions out far enough to sustain a slow period of raw material purchasing by tanners, and second many big tanners have remained quiet these last couple of weeks giving suppliers no reason to jump the gun and take the market down. Tanners will need to show a willingness to bid before suppliers will change their price ideas. Last week was more of the same, with likely some isolated trades done at lesser money, but not enough volume at those prices to affect the whole market. Most bids placed in the market were down as much as $2.00 from previous sales, and when packers and processors countered those bids, some of them disappeared. Those who were willing to stick in the game and negotiate prices could secure some hides at steady to maybe even slightly lower levels on select items. So, we feel that we must leave the seasonal average weight U.S. Big Packer Heavy Native Steer and Butt Branded Steer hides prices at $78.00 and $75.00 FOB plant basis, respectively. Seasonal average Big Packer Heavy Texas Steer hides were reported to have sold at between $70.00 to $73.00 per hide plant basis. Again, the contracted average weight range may well have affected those quotes. U.S Dairy Cow hide prices were unchanged last week, due mainly to a lack of orders. Plump cow prices again were firm last week and we still believe this is due to them being undervalued compared to their spready counterparts. We have heard that some upholstery tanners are negotiating their leather prices for their next orders. If, in fact, they are successful in raising their leather price in the face of the higher cow hide prices, then we very well may see the cow market resume its fever like activity that we have seen throughout the first quarter of this year.
The USDA’s Export Sales Report released on March 16, 2017 showed net sales of 572,800 U.S. cattle hides and wet blue equivalents for the 7-day period ending Thursday March 2, 2017. This net sales number is up from the 476,200 pieces reported as net sales for export the prior week. This sales number was bolstered by the wet blue numbers which came in at 263,400 pieces, only 46,000 pieces less than the total raw hides sold for the week. China was again the leader at 278,900 units with Italy coming in second at 87,100 units of which the clear majority was wet blue.
The Federally Inspected Slaughter (FIS) for the week ending Saturday March 18, 2017 was estimated to have been 585,000 cattle, which is basically unchanged from the 587,000 animals processed the prior week. For the same period, last year, the FIS for cattle was an estimated 550,000 head. The Year-to-Date cattle slaughter is up 4.8 percent from the same period last year.
This week, many of those in the hide business will be travelling to Asia to call on tanners and try to assess what their real situation is. We believe that this week will be like the opening seconds of round one of a boxing match, with both sides feeling each other out to see who will make the first move. This leads us to believe that again we will see a lackluster week of sales, with either side willing to trade punches and instead waiting until they meet again in the final rounds the next week in Hong Kong. We feel that one side will finally have to throw in the towel for the market to finally be given smelling salts and wake up out of its stupor. If the odd’s makers are smart, they would put the odds in favor of the suppliers, as we feel that tanners have been out of the market too long and will finally have to wake up and buy some hides. Then again, we’ve taken too much head trauma all these years so we might be wrong.
Golf Quote
It took me seventeen years to get three thousand hits in baseball. It took one afternoon on the golf course. – Hank Aaron
