The fact that last week was shortened by a holiday here in the U.S.A. did not help the Hide Market. What the market needed was a robust round of business, but that did not happen. Most of the U.S. hide suppliers lowered their asking prices to get their offers more in line with market prices. Tanners responded with bids aggressively lower than the adjusted asked prices. By week’s end, there was a fair amount of business put together and it was debatable as to whether sales matched the week’s production or not. The prices for the business that was booked, on both Steer and Cow hide selections, were down an average of $1.00. Tanners continued to lament about a lack of leather orders in certain finished leather sectors. Shoe upper leather orders are the most needed, we are told. A lot of quality complaints are also being heard from tanners buying U.S. hides. Things such as poor grading, grain quality, butcher damage, etc. Many of these complaints we feel are market related. One would relate such quality problems to winter damage, but we did have a rather mild winter here in the U.S. this year. So, it is only natural to think hide quality did not suffer as much as it would have during an average winter. Because of the National Holiday here last Monday, cattle slaughter in the U.S. came in below the 600,000 number. However, that number was still higher than the corresponding week from a year ago. One positive for U.S. raw and wet blue hide suppliers last week was the large export sales number reported by the USDA for the seven-day period ending Thursday, May 24th.
Following are our calls for the FOB plant prices for the seasonal average weight Big Packer Steer hide selections:
- Heavy Native Steer hides $59.00 to $ 60.00 per piece, down $1.00 for the week.
- Butt Branded Steer hides $49.00 to $50.00 per piece, which is down $1.00 from last week.
- Heavy Texas Steer hides between $40.00 to $42.00 per piece, down $ .50 per piece for the week.
The Export Sales Report released by the USDA on June 7, 2018, for the week ending Thursday May 31st. showed that 741,700 whole cattle hides, and wet blue equivalents were sold for export during that period. This number is down from the prior week’s reported 814,000 pieces sold. China was the number one buyer, taking 445,100 pieces or 60 percent of the total. Thailand was the second-place buyer with 87,400 units purchased. Followed by Korea with 77,500 pieces all raw hides.
Federally Inspected Slaughter, (FIS), for the holiday shortened week ending Saturday June 2, 2018, was an estimated 582,000 cattle. Year to Date FIS is an estimated 13,439,000 cattle, up 3 percent from a year ago.
Although the decline in the value of U.S. hides has been gradual, it has lasted for a long time. Most U.S. suppliers can live with a declining market if the decline is orderly. What hurts the market more than anything is buyers not living up to their contractual agreements. Since we believe they are comfortably sold ahead on some selections, we expect most U.S. packers, hide processors, and traders will have shorter offering lists this week. Those suppliers, for the most part, will be holding their asking prices steady on what they do offer. It is expected that U.S. fed cattle processors will stay busy for now as they continue to enjoy very large per head profit margins. It was reported by some analysts that because of lower fat cattle prices and stable demand for beef that last weeks per head profit margins were the largest in history. On the flip side for U.S. hide sellers the key, which most often is the case, will be demand. We feel that hide prices at their current levels should be attractive to tanners and their finished leather customers. It is just a matter of turning that attraction into demand. Every week we are closer to the bottom, is this the week we find it? Good luck to all.
MAC O’GRADY ON GOLF
“A hole in one is amazing when you think of the different universes this white mass of molecules has to pass through on its way to the hole”.
