Things slowed down noticeably for the U.S. hide market last week. The Chinese tanners slowed down their raw material buying in preparation for their New Year’s shutdown. Most of the Chinese tanners will close their factories this week, and will stay closed for anywhere between one to four weeks. The length of their holiday closures will differ depending on where they are located, their size, how busy they may be, etc. It was indicated by the USDA in their Export Sales Reports that over 60 percent of the U.S. raw hides sold for export in 2016 where purchased by Chinese tanners and that a third of the U.S. wet blue cattle hides sold for export during 2016 were also destined for China. So when the Chinese tanners slowdown, so does trading in the U.S. hide market. From the supply side, U.S. cattle slaughter was down last week to well below the 600,000 head level. This was the result of live cattle prices being higher and the beef cutout values declining which took U.S. beef processors profit margin into the red. Weather was also a factor last week, as storms disrupted the movement of cattle in the Mid-west early in the week. As for the U.S. Plump Steer/Heifer hides that were traded last week, contract prices seemed to have remained unchanged. The FOB plant price for seasonal average U.S. Big Packer Heavy Native Steer hides remained at $75.00 per piece last week. And, as to the value of the U.S. Big Packer Butt Branded Steer hide we are going to continue pegging it at a steady $72.00 per piece plant basis. The seasonal average Big Packer Heavy Texas Steer hide selection was reported to have sold last week at as high as $71.00 per hide plant basis. Of all the Plump Steer hides the Branded Steer hide selection saw the most demand. That we figure is a result of the fact that they are relatively cheap when compared with the cost of other Plump Steer hide selections, such as the Native and Butt Branded Steer hides. Sales of U.S. Cow also dropped in volume last week as suppliers of all the Cow hide selections had fewer hides on their offering lists and prices on those offerings were higher than the previous week. We did not hear of any Cow hides trading at prices that would have been considered lower than the most recent sale of that production. And, there were rumors of a number of Cow hide trades consummated at levels $1.00 or so above their most recently contracted levels.
The USDA’s Export Sales Report released on January 20, 2017 showed net sales of U.S. cattle hides and wet blue equivalents for the seven day period ending January 12, 2017, to be 618,100 pieces. And the report indicated that 349,000 or about 56 percent of those units were purchased by China.
The Federally Inspected Slaughter (FIS) for the week ending Saturday January 21, 2017 was estimated to have been 569,000 cattle, down from the prior week’s estimated 609,000 head processed and the 575,000 processed for the same period last year.
This week marks the start of the Chinese New Year, Spring Festival holidays in Asia. These holidays will for sure have a slowing effect on the amount of correspondence and business concluded between the U.S. hide suppliers and their very important tanner/customers in Asia. There will be continued correspondence and business will be done between U.S. raw hide and wet blue suppliers and their Asian counter parts this week, but it will be reduced in quantity and well below what we would call average levels. Our feeling is that both the U.S. hide and wet blue sellers and their Asian buyers have prepared themselves for this period. So we expect that these holidays will not have a great impact on hide and wet blue values. Suppliers appear to be well sold while some tanners may not have large inventories or purchases. Some of those tanners could be thinking they may have a chance to buy some raw material at lower prices as demand in general becomes reduced during the holidays, which could or could not be the case. We shall soon see.
Mulligan’s Laws
The best way to cause the prompt reappearance of a club lost on the course is to order a replacement.
They have the kind of glove you like in the pro shop, but not in your size.
