Last week was another slow-grind, as sellers and buyers still could not come together in agreement on prices. Some tanners finally showed a willingness to put in bids, although they were in some cases as much as $4.00 below last sales prices. It goes without saying that none of those very low bids were considered, but those tanners who were willing to start their bids within $2.00 of last week’s prices were successful in procuring some hides, that we still believe they need, at $1.00 down. Last week was also the first week that many suppliers were travelling to call on customers in Taiwan, Korea, and China. From what we have heard these trips were slow with very little business done. Those who travelled in Taiwan and China have received bids from customers that are lower than their expectations which prompted them to pass as they still felt that their positions allowed them to hold out. If you were looking for information out of Korea then you’re out of luck, those tanners decided to wait and see what the Chinese do before they make a move. All of this has us leaving the seasonal average weight U.S. Big Packer Heavy Native Steer from $77.00 to $78.00, and their Butt Branded brothers at $74.00 FOB plant basis. Seasonal average Big Packer Heavy Texas Steer hides were reported to have sold at between $70.00 to $72.00 per hide plant basis. Still, we must say that the U.S. Dairy Cow hide price did not move last week, which again we must attribute to a lack of activity. Plump cows, both Branded and Native, were not shown on many offer lists due to a good amount of business the prior few weeks. We still feel good about the cow market in general and expect this market to pick up after the show in Hong Kong.
The USDA’s Export Sales Report released on March 23, 2017 showed net sales of 320,600 U.S. cattle hides and wet blue equivalents for the 7-day period ending Thursday March 16, 2017. This net sales number is down considerably from the 572,800 pieces reported as net sales for export the prior week. China was again the leader at 130,700 units with Korea coming in second at 72,800 units.
The Federally Inspected Slaughter (FIS) for the week ending Saturday March 25, 2017 was estimated to have been 613,000 cattle, which is basically unchanged from the 585,000 animals processed the prior week. For the same period, last year, the FIS for cattle was an estimated 538,000 head. The Year-to-Date cattle slaughter is up 5.7 percent from the same period last year.
This week, the whole industry will converge upon the Hong Kong Convention and Exhibition Centre for the 2017 Asia Pacific Leather Fair (APLF). It is hard to deny the softening of the market these last two weeks and tanners will try to use that to their advantage to lower prices. The large FIS last week will have them excited as well. The question will be how bad tanners need to fill their raw hide inventory. As you know if you’ve been reading this market report for the last month, it has been our opinion that tanners need hides more than suppliers need to sell. It is admittedly hard for us to keep that same tone as we limp into the APLF, but suppliers have all held their ground thus far so why would they fold now after travelling to meet tanners on their home turf? If customers arrive with a willingness to bid at reasonable levels, then we believe they will find open ears and minds and finally can restock the raw hide inventory that they need. But, if like the last few APLF’s, tanners arrive with the mindset that suppliers will come to them and lay cheaper hides at their feet then they will be disappointed.
Golf Quote
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