We are going to call last week’s U.S. hide market fully steady. We can’t say for sure what the volume of sales consummated by U.S. raw and wet blue hides suppliers last week was, but we can say with confidence, that sale prices were steady. With many U.S. hide sellers traveling in Asia last week calling on their tanner customers prior to this week’s “All China Leather Exhibition”, it was hard for us to get a feel as to how much business they put on the books during the week. We suspect that many tanners are still testing the market with lower bids, and suppliers are not of a mind to accept any bids lower than their last traded levels. The amount of sales made did not match the week’s production of raw cattle hides. Cattle slaughter here in the U.S. remained at a steady to strong pace while packer per head profits, continued to provide motivation for them to harvest what they can. The reports we got last week from travelers and tanners in Asia were mixed. Most reports were saying that upholstery and bag leather business remained okay, but other reports saying that shoe leather orders remained lackluster. This seems to be a recurring theme, but we feel that shoe leather business will improve as we move into the fall. We also were told that some tanners had plenty inventory of raw hide and wet blue, while other tanners need to buy. Some tanners are asking to delay shipments for a week or so while other tanners are asking for quicker shipment. A mixed bag indeed. Last week the USDA Export Sales Report for raw and wet blue hide sales again came in at a positive level for the market. This makes five weeks in a row that a respectable number has been reported. We calculated to the best of our ability, this year’s U.S. cattle slaughter number, the reported export number, and the outstanding sales number for raw and wet blue hides. We made an allowance for domestic consumption, and estimated at the unreported exports. Our conclusion was that on an average, U.S. suppliers are sold about 3.8 weeks forward, of course this can vary by selection. We consider this to be a factor as to why suppliers can remain firm on their asking prices for now. There is no reason to change what we consider to be the market prices for U.S. Big Packer hides, so we are leaving the Heavy Native Steer hide price at $62.00 per piece FOB plant, and the FOB plant prices for the Big Packer Butt Branded Steer at $55.00 to $57.00 per hide. Likewise, we are still calling the Big Packer Heavy Texas Steer hide price unchanged, and between $50.00 to $51.00 FOB plant. Cow hide trading may have been a little less active than the Steer/Heifer hide trading, but sales prices to our knowledge did not change from the prior week’s sales prices as suppliers turned down some rather low idea/bid prices that were put in front of them.
The Export Sales Report released by the USDA on August 24, 2017 for the 7-day period ending Thursday August 17th stated that a healthy 590,100 whole hides and wet blue equivalents were sold for export during this period. This is a fairly large number, and is the 5th week in a row in which a decent sales number was reported. China reportedly took 345,300 pieces or a little over 58% of the units sold.
Federally Inspected Slaughter (FIS) of cattle for the week ending Saturday August 26, 2017, was estimated 639,000 head. Year-to-Date FIS is estimated to be up 1,151,000 head or 5.9 % from a year ago.
This is the week that should give us some firm idea as to the direction of the U.S. hide market for the Fall season, at least that is what we are hoping for. The last big get together in Asia for the all concerned parties was the Asian Pacific Leather Fair, which was held in Hong Kong at the end of April. No one came away from that show with a positive attitude, and since the first of March U.S. hide prices have tumbled by 20 to 25 percent depending on selection. We are pulling for everyone to come away from this week’s gathering with a smile on their face. We don’t think it will take too much, just some decent buyer interest for shoe leather tanners, and continued decent business for the other leather categories such as upholstery, and handbag. We are keeping our fingers crossed, so don’t let us down.
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