THE HIDE MARKET – FEBRUARY 5, 2018
Our take on last week’s U.S. Steer hide market was that price remained steady for the most part, but volume was down. This resulted from the fact that there were fewer Steer hides offered last week, and the fact that no buyer was willing to pay more than last traded levels. There were rumors circulating that a couple of the large U.S. packers made some large, block sales direct to some large tanners at prices that were lower than the reported levels. These claims came out of more than one Asian country but are not easy to verify. The information we received last week regarding the leather business is not unchanged from what we have been hearing for some time now. The weak sector remains the shoe leather business. Tanners are still not getting the orders for shoe leathers they have been anticipating. We understand that there has been an increase in shoe leather orders, but they remain below tanner’s expectations. The Export Sales numbers released by the USDA last week (see below) do not make any sense to us. They seem to be too low and are not indicative of the steady market we have seen for the last several weeks. U.S. cattle slaughter last week jumped back up to the over-600,000-head level that we became accustomed to during the second half of last year. However, we may see a pullback in the weekly slaughter number over the next couple of weeks because live cattle prices have jumped up to a point that packer margins have reportedly dropped, for some, into the negative. But, the cattle on feed numbers recently released by the USDA indicate that there will be plenty of cattle available for slaughter as we move towards spring. The steady Steer hide market has us leaving our quotes for the FOB plant values of the Big Packer Steer hides unchanged. They are $ 67.00 for Heavy Native Steer hides, $ 63.00 for Butt Branded Steer hides and between $ 52.00 to $ 54.00 per piece for Heavy Texas Steer hides. Demand for U.S. Cow hides picked up somewhat last week, but the demand came hand and hand with lower bid prices. Sellers of Dairy and Plump Branded Cow hides had to be satisfied with the fact that they moved their sold positions out further, even if they had to take their sales prices down $1.00 or so per piece.
The Export Sales Report released by the USDA on February 1, 2018 for the seven-day period ending Thursday, January 25th showed that 341,600 whole cattle hide, and wet blue equivalents were sold for export during that period. This number is even less than the 357,500 pieces that had been reported as sold the prior week. The exports/shipments during the period were reported to be 499,800 pieces.
Federally Inspected Slaughter, (FIS) for the week ending Saturday February 3, 2018, was an estimated 629,000 cattle. That Number is up from the prior week’s estimated 588,000 head harvested. Year to Date FIS is an estimated 2,438,000 head which is up 3 percent from a year ago.
This week will be the last full week of business prior to China shutting down for its Lunar Calendar New Year/Spring Festival. Will we see Chinese tanners in the market this week securing some raw material at lower prices for arrival in March? Well, from what we have seen as reported sales over the last month, we would expect that may be the case. However, what we are hearing from U.S. Steer hide suppliers is that they are well sold ahead and that they do not expect to have to take prices down to sell any Steer hides they wish to move. Although interest appeared to improve last week for both the U.S. Dairy Cow and Plump Branded Cow hides, we still feel that suppliers need to put more business on the books to feel comfortable with their sold positions. We feel that the current prices for U.S. Dairy and Plump Branded Cow hides should be attractive to tanners. Let’s see if that is the case. Have a good week.
Golf Quote
“Sometimes it seems like a man ain’t the master of his own destiny…The ball takes a funny little bounce here or a putt takes a funny little turn.”
– Sam Snead
