U.S. raw hide and wet blue hide prices continued to decline last week. According to the two largest U.S. based reporting services all U.S. hide selections prices dropped by $1.00 to $2.00 last week. The big question for us at the end of last week was, were U.S. sellers able to put enough business on the books to stabilize raw hide and wet blue prices? The answer we believe is that if sellers did not market a week’s production they came darn close. Many Asian tanners continue to complain about their business being unprofitable. Chinese tanners for the most part continue to say that U.S. hide prices must go lower if they are going to make a profit on their finished leather. The fact that split values continue to be sick is also a factor that effects their ability to make a profit. The Chinese government reportedly is ramping up their pressure on tanners to clean up the environmental issues that many tanners, mainly smaller tanners, have. As for Korea, tanners complain that they just don’t have enough leather orders, so their need to buy raw hides is reduced. Although they are limited in their buying power when compared to China or Korea, Europe has been more active in the Steer hide market particularly when it comes to Heavy Native Steer hides or Native wet blue material. At the close of business last Friday, the FOB plant value of Big Packer and equivalent seasonal average U.S. Heavy Native Steer hide was between $72.00 to $73.00 per piece. The seasonal average Big Packer and equivalent Butt Branded Steer hide value was between $69.00 to $70.00 per piece FOB plant basis. As for the Big Packer Heavy Texas Steer hide FOB plant price we are calling it in the $65.00 to $67.00 range. The sales prices for most U.S. Cow hide productions also slipped by $1.00 to $2.00 last week. These declines we feel, were more in sympathy with the Steer hide market than supply and demand.
The Export Sales Report released by the USDA on April 20, 2017 stated net sales of 421,600 U.S. cattle hides and wet blue equivalents were sold for export during the 7-day period ending Thursday April 13, 2017. This number, is up from the 377,800 pieces reported to have been sold for export the previous week. China was the leading buyer with 207,700 pieces purchased during the period. Italy was the second-place buyer for this most recently reported period, with 87,500 pieces purchased, all of which were wet blues.
The Federally Inspected Slaughter (FIS) for the week ending Saturday April 22, 2017 was an estimated 595,000 cattle, up a little from 590,000 head harvested the previous week. For the same period, last year, the FIS was an estimated 585,000 head. Year-to-Date FIS is up 6 percent on last year.
With the anticipated increase in the U.S. Cattle slaughter that most expect to see as we move into May and the Bar-B-Que season, we believe U.S. producers need to put another good week of raw hides and wet blue hide sales on the books this week. It is our feeling that sellers need to sell more product this week than last week, if they hope to put a bottom in the market. Make no mistake many tanners need hides, and with the hope to buy hides a little cheaper, they have been playing their hand close-to-the-vest. Buying at the bottom of any commodity market is not an easy task, and in most instances, buying at the bottom has more to do with lucky timing than skill. We expect a sizable number of knowledgeable tanners to enter the U.S. hide market this week to take advantage of Steer hide prices that are down by $3.00 to $5.00 from a month ago levels. We will let you know next Monday if our expectation of tanners entering the market comes to be this week or not. We are pretty sure it will happen sooner rather than later.
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