There was more action in the U.S. raw hide and wet blue hide markets last week than we had seen in recent weeks. Again, there were a sizable number of bids being made by tanners, and again those bids were anywhere from $1.00 to $4.00 less than suppliers offering prices. The difference last week was that suppliers counter those bids at prices that were acceptable to a sizable number of their tanner customers. As a result, those counters generated a good amount of business being booked. Korean tanners, Mexican tanners, some of the small and medium sized Chinese tanners were active buyers. But, the larger Chinese tanners were notable for their absence. Did U.S. raw hide and wet blue sellers book a week’s product? That may be debatable, but it was the most active week, sales-wise, that we had seen in sometime. Increased sales volume last week was attributed to tanners buying raw material to keep their factories running, rather than the result of any substantial improvement in the tanning industry. Most reports from tanners in Asia continued to be negative to the market. We were told that the shoe business of the Chinese domestic market remains dull and in its slow season. Pressure on the Chinese tanning industry by their government’s environmental arm continues to disrupt many tanners there, and we understand this will continue. Korean tanners still complain that their leather orders are few and far between. Poor split prices remain a drag on tanners thought out Asia. Cattle slaughter jumped up in the U.S. last week to the highest weekly number of the year. The USDA’s Export Sales Report that was released last Thursday for the seven-day period ending April 20th caused a lot of head scratching. It showed Thailand was the number one buyer for that week? As mentioned above, packers, processors and traders of U.S. hides and wet blue lowered their prices last week in order to put some sales together. Therefore, we are reducing what we see as the FOB-plant market prices for the U.S. Big Packer and equivalent, seasonal average weight Steer hide productions as follows: the Heavy Native Steer hide selection is between $71.00 to $72.00 per piece. The Butt Branded Steer hide selection at $68.00 per piece. The Heavy Texas Steer hide selection at between $64.00 to $65.00 range. Values of all the U.S. Cow hide productions, like the U.S. Steer hide productions dropped by $1.00 to $2.00 last week.
The Export Sales Report released by the USDA on April 27, 2017 stated net sales of 605,000 U.S. cattle hides and wet blue equivalents were sold for export during the 7-day period ending Thursday April 20, 2017. This number, is up from the 421,600 pieces reported to have been sold for export the previous week. Surprisingly, Thailand was reported to be the leading buyer for the week ending April 20th as it was credited with purchasing 215,000 pieces during the period. Apparently, this was an accumulation of sales that had not been reported earlier in the year by the selling party, which only adds to the confusion.
The Federally Inspected Slaughter (FIS) for the week ending Saturday April 29, 2017 was an estimated 624,000 cattle. This number was up a good amount from 595,000 head harvested the previous week and was the largest weekly slaughter total since the week ending November 15th of last year. For the same period, last year, the FIS was 590,294 head. Year-to-Date FIS is up 565,000 head or 6 percent from a year ago.
Will the larger Chinese tanners enter the U.S. hide market this week? That will determine the direction of the market for the week, and going forward for the near term. Hard to imagine the larger Chinese tanners not needing to enter the U.S. hide market, when we consider how long they have been on the sidelines. Maybe the fact that last week was an active one in the market will cause these big guys to get going and buying some U.S. raw material. We do expect the cattle slaughter to be over 600,000 head again this week, but it will be less than last week’s number and not historically large. Several holidays in Korea and China will shorten the work week for most of Asia. But, most hide buyers are 24-7, holiday or not.
Golf Truisms
The ball you can see in the rough from 50 yards away – is not yours.
It’s not a gimme if you’re still away.
