The Fourth of July holiday, which we observed here in the U.S.A. last Tuesday, really broke up trading for the week. Since most U.S. suppliers of hides and wet blue did not put out offers until Wednesday last week, there was only 2 days left to gather bids and move product. This coupled with the lack of interest from tanners internationally resulted in a limited amount of business being put together during the week. Last week’s limited activity comes on the heels of a string of less-than-exciting trading weeks for U.S. hide market. On the supply side last week, U.S. beef packers, who continued to have robust per hide profit margins, processed a sizable number of cattle for a holiday shortened week. Negative comments from Asian tanners regarding their leather business seemed to intensify last week. It seems the lack of leather orders for all sections of the industry, excluding the auto upholstery tanners, has caused the Asian tanners to reduce soaks, limiting their cash flows. Tanners say that their leather buyers/customers are pushing for lower prices on those limited orders, as these buyers have seen raw hide prices decline by more than 10 percent over the last quarter. With Asian tanners burning up a large percentage of the U.S. hide production, the health of their business is critical to U.S. hide suppliers and the return that beef packers will receive for their hides. All the above attributed to U.S. Steer and Heifer hide prices moving lower, on average, by $1.00 last week. We are currently calling FOB plant price for the seasonal average U.S. Big Packer Heavy Native Steer hide $65.00 and Big Packer Butt Branded Steer hide value to be $63.00. As for the Big Packer Heavy Texas Steer hide selection, we are moving it down a notch to between $60.00 and $61.00 per piece plant basis. U.S. Cow hide market was only slightly softer last week, as some productions declined by as much as $1.00 while the majority remained steady.
The Export Sales Report released by the USDA on July 7, 2017 for the 7-day period ending Thursday June 29, 2017 stated that a healthy 554,100 whole hides and wet blue equivalent were sold for export during that week. This number is up from the 503,400 pieces reported sold during the prior week. China was the leading buyer taking 324,000 units.
Federally Inspected Slaughter (FIS) of cattle for the holiday shortened week ending Saturday July 8, 2017 was estimated to be 546,000 cattle. For the same week, last year, the FIS was an estimated 514,000 cattle. Year-to-Date cattle FIS is estimated to be up 5.8 % from a year ago.
We are looking for this week to be a busy one. Beef Packers, who have been enjoying very nice per head profit margin, will be wanting to process as many cattle as they can. The only thing that can curtail them from running at capacity is their ability to move/sell the meat they are producing. This means U.S. raw hide and wet blue marketers will have to move more product than the last few weeks if they want to maintain whatever forward sales positions they may have remaining after several less-than-par weeks. Looking forward to, hopefully, a busy week for all.
GOLF TRUISMS
The lowest numbered iron in your bag will always be impossible to hit.
The person you most hate to lose to will always be the one who beats you.
