The U.S. hide market was quieter last week than suppliers had hoped. There were a good number of bids made by tanners on the Steer/Heifer hide selections and for all Cow hide selections. However, most of those bids remained at levels unattractive to U.S. suppliers, as they have been for the past 3 weeks. There was some business put together on U.S. Steer hides last week but, from what we could tell, that business was limited and was done at prices that were down by at least $1.00 per piece from their most recent sales levels. We feel confident in saying that by week’s end packers, dealers, and traders failed once again to sell a week’s production. Tanners of U.S. Steer hides continue to say that they cannot make a profit with hide prices and split credits at their current levels. Also, it is reported that the Environmental Protection arm of the Chinese government is going intensify its pressure on polluters, which of course will include tanners. This fact adds to the uncertainty for the hide market. Because of these negatives it appears that there is a concerted effort by tanners in Asia to try and stay out of the market until hide prices drop lower. Due to the reported sales of U.S. Steer hides last week, we are lowering what we consider the FOB plant values of both the seasonal average weight Big Packer Heavy Native Steer hide and Big Packer Butt Branded Steer hide selections by $1.00 to $2.00 from our last week’s quotes. That puts the Native Steer at between $74.50 and $75.00 FOB plant and the Butt Braded Steer at $72.00 per piece FOB plant basis. The spread in the reported sales prices for the seasonal average weight Big Packer Heavy Texas Steer hides widened last week, with one Big Packer reporting they sold this item at $68.00 per piece while another Big Packer reported that they sold this selection at $71.00 per hide, both prices FOB plant basis. Some U.S. Cow hide marketers put some sales on the books last week, but like the Steer hide categories, those quantities seemed limited. On the Plump Cow hide selections, producers could maintain steady sale price levels. On the other hand, suppliers of the Dairy Cow hides had to drop their prices by $1.00 to $2.00 per hide to conclude some business.
The Export Sales Report released by the USDA on April 6, 2017 showed net sales of 441,700 U.S. cattle hides and wet blue equivalents traded for export during the 7-day period ending Thursday March 30, 2017. This net sales number, was down from the 473,200 pieces reported to have sold for export the prior week. China was the biggest buyer taking 203,900 of the units sold during this period.
The Federally Inspected Slaughter (FIS) for the week ending Saturday April 8, 2017 was estimated to have been 573,000 cattle. This number is down from 593,000 head processed the prior week, because of beef packer’s margins reportedly falling into negative territory due to the decline in wholesale beef prices. For the same period, last year, the FIS for cattle was 536,000 head. The Year-to-Date cattle slaughter is up 6.1 percent from the same period last year.
As we enter this week, Easter Week, we are still looking for that elusive big week of trading that will put a bottom in U.S. hide prices. We figure that both tanners and hide producers need to do some trading. On the supply, U.S. raw hide seller’s positions have shrunk over the last month or so due to the lack of activity on the part of tanners. Those tanners whom, we must guess, have not improved their raw material ownership positions over the same period. So, in our eyes, the market seems to be set up for a good round of trading this week. But, we figured it was set up that way last week too. We will just have to see what develops this week.
Golf Quote
“If the Scots could drink faster, golf would be 14 holes and I would have won 76 majors”
– John Daly
