Last week there was once again no shortage of bids in the market for both U.S. Raw and Wet Blue hides. If you were a seller in last week’s market, your success was totally dependent on what you had to sell. If you had Big Packer equivalent Heavy Native, Butt Branded or Branded Steer hides on your offer list, you moved them easily at prices that were steady to up $1.00 or $2.00. If, as a seller, you had second level Steer hides or low grades, then you struggled to find a buyer. Tanners, other than upholstery tanners, in all the major export markets continued to complain about fewer leather orders and poor cash flow. But, there were enough tanners in the market buying raw material to keep the market for good quality material cleaned up. This buyer interest kept the prices for desirable selections on the firm side. As for supply side, U.S. cattle slaughter number picked up a little last week, but remained low. The reports from packers regarding the demand for beef remained pessimistic, with most saying they don’t expect improved demand until late April or May. On the demand side of the equation, we received a few reports from attendees of the Lineapelle Leather Fair, held last week in Milan, Italy. Those reports were that the show was well attended and active. Although not a lot of hides were traded at the show, the hide suppliers that were in attendance came away with a positive feeling.
For the week, we put the value of the seasonal weight Big Packer Heavy Native Steer hides at $72.00 per piece and the Butt Branded Steer hides at $ 70.00 both FOB plant basis. These prices are both up $1.00 from a week ago levels. The seasonal average weight Heavy Texas Steer hide selection was reported to have been selling at $63.50 to $64.50 per piece, prices FOB plant basis. This price translates to increase in value of $1.50 to 2.00 per piece from sales a week ago. U.S. Cow hide sellers were able to move as much as they cared to last week, at steady money or at slightly improved levels.
The Export Sales Report released by the USDA on February 25, 2016 for the week ending February 18, 2016 showed net sales of 423,100 cattle hides and wet blue equivalents. This quantity is a little down from the prior week’s sales number of 457,200 units, but in this week’s report there was a net negative for Vietnam of 78,100 pieces of wet blues reported. China was the first place buyer with 213,300 pieces purchased. Korea was the second largest buyer with a robust 116,800 units booked.
The Federally Inspected Slaughter (FIS) for the week ending Saturday February 20, 2016 was estimated to be 534,000 cattle up a little from the previous week’s estimated slaughter number of 521,000 animals. For the same week last year the FIS was 525,889 head of cattle. Year-to-date estimated cattle slaughter is down 1.2 percent or 55,000 head from last year’s number.
At the close of business last Friday there was a feeling among suppliers that there was unfilled demand in the market that would carry over into this week. That demand coupled with continued low expectations for cattle slaughter here in the U.S. point to a firm hide market. Also, it is important to remember that today’s hide prices are a good 25 percent lower than they were a year ago. However with the negativity that we continue to hear from a good number of tanners, other than upholstery tanners regarding their leather orders, drop split prices and their cash flow problems make us feel that hide prices can’t move up to any great degree. Our hope is for a steady hide market with a firm tone which we feel should help tanners in their negotiation with their leather customers.
Golf Quotes
“Playing the game I have learned the meaning of humility. It has given me an understanding of futility of the human effort.”
-Abbe Ehan
