Most of those who attended the Asian Pacific Leather Fair in Hong Kong last week will be returning to their offices this week. Though many U.S. raw hide and wet blue marketers may not have sold large quantities last week, they did find a fair amount of interest in their products. The only reason for any supplier not moving product was because the prices they were being bid were not to their liking. The U.S Steer hides that were sold, were done at levels $1.00 to $2.00 lower than their previous trading level. Tanners at the show continued to say that leather prices, drop split prices, pollution control problems, and increasing production costs did not justify the prices U.S. hide suppliers were asking for. In the end tanners, could buy some of the raw material that they wished to purchase, and at somewhat lower prices. For the most part, those purchases were made by tanners from traders. Not that packers did not also put some lower priced sales on the books, but it felt like traders led the way in getting sales on the books. Seasonal average weight Big Packer Heavy Texas Steer hides were reportedly sold early last week at both $68.00 and $69.00 per hide FOB plant basis. These sales prices, which were down between $2.00 to $3.00 per piece from their prior reported trading levels, pretty much set the tone of the market at the leather show. The values of the other Big Packer Steer hide selection held up a bit better. We are going to call last week’s ending value of the seasonal average U.S. Big Packer Heavy Native Steer $76.00 to $77.00 per hide FOB plant basis. We are calling the Butt Branded Steer hide market price $73.00 to $74.00 per hide FOB plant basis at the close of last week’s trading. Sales of U.S. Cow hides were a mixed bag last week, depending on selection and origin. The bids tanners made for U.S. Dairy Cow hides were down, on average, about $2.00 per piece last week. We do not think a lot of this selection traded hands last week, as many suppliers still appear to have some sold-ahead positons that made them resistant to lower bid prices. Other than the rumor that one large dealer/trader sold a large volume of Plump Cow hides at lower levels, sale prices for the Plump Cow hides, both Branded and Native, held their own
The USDA’s Export Sales Report released on March 30, 2017 showed net sales of 473,200 U.S. cattle hides and wet blue equivalents for the 7-day period ending Thursday March 23, 2017. This net sales number, though not large, is up considerably from the 320,600 pieces reported as net sales for export the previous week. China was credited with booking 300,700 or about 63 percent of the pieces sold.
The Federally Inspected Slaughter (FIS) for the week ending Saturday April 1, 2017 was estimated to have been 593,000 cattle, this number is down slightly from 613,000 head harvested the previous week. For the same period, last year, the FIS for cattle was 538,039 head. The Year-to-Date cattle slaughter is up 6 percent from the same period last year.
This week, we look for tanners, who were able to push U.S. hide prices lower last week, to push hard again this week for further declines. Even though U.S. beef packers saw their profit margins slip considerably last week, they were still operating in the black. We look for the U.S. cattle slaughter number to hang around the 600,000 head level for the near term as both cattle feeders and packers continue to have profitable businesses. However, feeders are pulling cattle forward, feeding them for shorter periods of time, to meet packer’s current demands for these animals. This, pulling of cattle forward, will affect the number of fed cattle available for slaughter as summer nears. Will tanners be able to pull U.S. hide price lower this week? Well we think they will, but we expect those price declines will be limited as we do feel that tanners do have some leather orders and they as a group are not long on raw material inventory.
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