THE HIDE MARKET – OCTOBER 1, 2018
The U.S. hide market was rather quiet last week, but for the first time in a while this was not due solely to the hide market itself. It was a holiday in both Korea and Taiwan, the Lineapelle show in Milan, as well as the United States Hide, Skin, and Leather Association annual meeting in Chicago. This led to subdued buying interest for most of the week, as both sides of the buying equation found themselves out of the office for most of the week. There were some trades done at mostly steady prices on U.S. Steer hides, with the occasional trade done slightly higher, although those trades were not the norm. Dairy Cow hides found good interest last week and saw steady to slightly higher prices. Lower quality plump Cow hides continue to take a beating, as the demand for lower grade material seems to only get worse. The topic of leather demand dominated the conversation last week at the USHSLA meeting, as the Association itself as well as other entities are working to try to come up with strategies to positively impact the demand for leather. The industry, on both the supplier and the tanner side, will need to work together to show that leather is still a sustainable and worthwhile product. With hides, and subsequently leather, prices at an all-time low, there is no better time than the present to get this message out there to designers to show that consumers do still want leather, even if they need to be reminded. If leather is more sought after, then we believe that even the lower end material will find a home, and once again there will be a market for lower grade hides. For the sake of those who produce lower grade hides, we hope this change is coming soon. On the supply side we will continue to see the slaughter number at these higher levels. Not only is beef demand still going strong but the newest cattle on feed reports show that the cattle supply is going to continue to grow and all those cattle will need to be processed. With the supply side going unchanged, the only way to turn around the hide market is to balance-out leather demand. One thing has been apparent- lowering price does not create demand- so now is the time to think outside the box and get creative as an industry.
As for the FOB plant values on seasonal average weight Big Packer Steer hide selections we are saying:
- Heavy Native Steer hides at between $54.00 and $55.00 per piece, unchanged from the prior week.
- Butt Branded Steer hides at between $44.00 and $45.00 per piece, unchanged from the prior week.
- Heavy Texas Steer hides at between $33.00 and $34.00 per piece, unchanged from the prior week.
The Export Sales Report released by the USDA on September 27, 2018, for the week ending Thursday September 20th stated that 421,600 whole cattle hides, and wet blue equivalents were sold for export during that 7-day period. China, the number one buyer, purchased 235,400 of the units sold. The second largest buyer was Korea with 54,200 raw hides.
The USDA estimated the U.S. Federally Inspected Cattle Slaughter, (FIS) for the week ending Saturday, September 29, 2018, to be 650,000 head. This number is down a touch from the prior week’s 657,000 head processed. Year to date the FIS is up 2.7 % from a year ago.
This is Golden Week in China, so we expect the market to be rather quiet again this week. It is a safe prediction to say that the market price of U.S. Steers will be steady once again, since suppliers are usually hesitant to take lower prices when bids are few and far between. Plump cow suppliers will continue to try to ward off lower prices since we are getting closer and closer to these hides bringing no return to the packers who produce them or being discarded altogether. We are confident that all the work being done to influence leather demand will bare fruit, but this will take time and as we all know time is not in infinite supply.
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