Prices for the Steer hide selections again moved lower by a couple of dollars per piece. There were also some slightly lower-priced sales reported a few of the Cow hide selections. But, really, the current market price for many Cow hide selections, like Southwestern Brand Cow hides, are so low that they have no room to move lower. There is a price point where it does not pay to process certain hide selections and it is more economical to render them or take them to the land fill. We have already seen that Renderers are no longer saving the hides and skins from the carcasses they pickup. And, small packer hides are, because of their value, being discarded rather than cured. The behavior of some buyers has become unacceptable. There were more stories in the market place last week regarding some less than honorable Chinese and Korean tanners reneging on contracts. They either disregarded contracts totally or are insisting that sellers reduce the original contracted prices by various means, such as demanding straight price reductions or insisting that sellers average down the prices on outstanding contracts. Guess the spread between their contracted prices and the current market prices is just too large for these offending tanners to resist. This poor behavior of course adds to the downward pressure on U.S. hide prices. On the bright side for U.S hide sellers was the fact that the number of bids in the market had increased dramatically by Thursday and Friday of last week. And, we believe a sizable number of hides sales were consummated. This, we believe, is the result of fact that prices for all the hide selections were down to, or below, any we had seen during the last nine to ten years. U.S. Cattle slaughter last week declined a little from the prior week but was above the number processed during the corresponding week a year ago. Although Beef Packer’s profit margins have shrunk over the last few weeks they remain well in the black. The U.S.D.A. Export Sales Report for Cattle hides which they released last Thursday for the prior week, was on the low side and not a positive for the market.
Following are our quotes for last week’s FOB plant prices of the seasonal average weight Big Packer Steer hide selections:
- Heavy Native Steer hides between $54.00 and $55.00 per piece, down $ .50 from a week ago.
- Butt Branded Steer hides $42.00 per piece, down $1.00 per hide for the week.
- Heavy Texas Steer hides between $32.00 and $34.00 per piece, down $1.50 for the week.
The Export Sales Report released by the USDA on July 19, 2018, for the week ending Thursday July 12th stated that 438,300 whole cattle hides, and wet blue equivalents were sold for export during that period. This number is down from the 463,200 pieces reported as sold the prior week. China purchased 203,400 or 46 percent of the of the pieces sold. The second-place purchaser Korea was credited with buying net 109,500 units, all of which were raw hides.
The estimated Federally Inspected Slaughter, (FIS), of cattle for the week ending Saturday July 21, 2018, came in at an estimated 635,000 cattle. This number is down a little from the prior week’s 650,000 head.
Marketers of U.S. raw and wet blue cattle hides will be trying to stop the bleeding this week. The U.S. hide market has been in a downward slide all of 2018. To repeat what we mentioned last week, some of the U.S. lower quality, less desired, hide selections, such as Renderers and Small Packer hides are no longer being saved, or cured. And, if the value of some of the lower-grading U.S. Br. Cow hide productions move much lower, packers and processors could well cease processing them also. We know that the U.S. Summer and Fall production hides that are currently being marketed by suppliers are of the best quality of the year. Tanners know this, and couple that with today’s prices, some of them should be thinking now is an opportune time to put on some inventory.
Mulligan’s Laws
The only time you play great golf is when you are doing everything within your power to lose to your boss.
The lower the stakes in any match, the more outrageous the behavior of its participants.
