U.S. Beef Packers had another record breaking run last week, setting an all-time record for their per head profit margin for the cattle they slaughtered. For obvious reasons, these U.S. packers processed more cattle last week than any other week during this year. While this was going on we continued to hear from our customers in Asia that their leather business has not improved. They insisted that with the supply side growing U.S. raw hide and wet blue hide prices must come down. From our view point, sales of U.S. hides and wet blues appeared to slow even more last week than they had slowed over the previous couple of weeks, and we for sure did not feel that U.S. Steer hide producers were able to sell a week’s production. But, we did continue to hear of some direct, large block sales, of both raw hides and wet blues, being made by some large producers to some large capacity tanners. These sales are rumored to be at price levels that are lower than what one would consider the market, these rumors are unsubstantiated. If these sales did take place they were not reported, nor was the volume of these sales reported. For sales that were reported last week, to the various market reporting services, prices for the Steer hide selections were anywhere from steady to down $2.00 per piece. At the same time, last week’s reported sale prices of the US. Cow hide selections were steady to slightly higher depending on the selection and origin. It did appear that the number of sales put on the books by Cow hide suppliers did not match production. An increase in demand was seen for low grades, renderers, and small packers as well as number threes last week. At the close of business last Friday, we are going to call the FOB plant value of the seasonal average U.S. Big Packer Heavy Native Steer hide to be $66.00 per hide. We are leaving the Butt Branded Steer hide price, steady with its a week ago level of between $64.00 to $65.00 per hide plant basis. As for the seasonal average Big Packer Heavy Texas Steer hide selection, we are putting its FOB plant value at the end of last week at between $60.00 and $62.00 per piece.
The Export Sales Report released by the USDA on June 29, 2017 for the 7-day period ending Thursday June 22, 2017 stated that a healthy 503,400 whole hides and wet blue equivalent were sold for export during that week. This number is down from the 578,400 pieces reported sold during the prior week. Shipments for the period came in at a robust 553,900 units.
Federally Inspected Slaughter (FIS) of cattle for the week ending Saturday July 1, 2017 was estimated to be 638,000 cattle. This number was up slightly from the 632,000 animals processed the prior week and is the largest weekly FIS this year. For the same week, last year, the FIS was an estimated 605,000 cattle. Year-to-Date cattle FIS is estimated to be up and estimated 853,000 head or 5.8 % from a year ago.
This will be a shortened work week here in the U.S.A. as we celebrate our Independence Day National Holiday on Tuesday the Fourth. How much hide business will be crammed into four days will be interesting to see. Despite the great profit margins that beef packers are currently enjoying, the cattle slaughter number will be down considerably this week because of the holiday. We think that U.S. hide and wet blue sellers will still be looking to sell their wares this week, having lost a good bit of their sold ahead positions in June.
GOLF TRUISM
A golfer hitting into your group will always be bigger than anyone in your group. Likewise, if you accidentally hit into a group, it will consist of a football player, a professional wrestler, a convicted murderer, and a lawyer.
