Sales of U.S. hides, skins, and wet blues, were limited last week. It was expected to be a slow week for sales not only because it was a U.S. National holiday shortened week, but also because suppliers and buyers came into last week at a standoff on what U.S. raw material prices should be. As the week progressed there was some business put together, but for the most part, the standoff between buyers and sellers continued. The majority of the tanners in Asia were singing the same tune last week that they have for some time. Those tanners were lamenting the lack of leather business and the weak drop split market. The government closings of tanneries in an area of Jiangmen, China was also mentioned by the Chinese tanners as a situation that could push hide prices lower. The majority of U.S. Steer hides that were sold last week were done so at steady money to down as much as $1.00 per piece from the previous sales levels. As a result of last week’s sales, we are putting the FOB plant value of the Big Packer and equivalent Steer hides at the following levels: Heavy Native Steer hides at $76.00 per piece, steady with the previous week’s quote, Butt Branded Steer hides at USD 74.00 per hide which is down $1.00 from the top of our last week’s reported price range, and for the Heavy Texas Steer hide selection, we are leaving their value at between $71.00 and $72.00 per hide, depending on origin. There seemed to be more interest in the U.S. Cow hides, both the Beef and Dairy breeds, last week. It seems as it had the week before last, that the business that was put together on Cow hides were at steady money.
The Export Sales Report published by the USDA on July 8, 2016 for sales made during the week ending June 30, 2016 indicated that 329,500 hides and wet blue equivalents were sold for export during that period. This number is down considerably from the prior week’s 587,700 pieces reportedly sold for export. China was the leading buyer with 125,200 pieces purchased, which amounted to 38 percent of the units sold. That 38 percent of the sales is lowest percentage of the total that we have seen by China buy in a long time.
The Federally Inspected Slaughter (FIS) for the holiday shortened week ending Saturday July 9, 2016 was estimated to be 513,000 head of cattle. Down from the 598,000 head processed the week before last. Year-to-date cattle slaughter is up 424,000 head or 2.9 percent from a year ago.
As the last few weeks have shown us by way of the U.S.D.A. Export Sales Reports, Chinese tanners for the larger part have stayed away from buying U.S. Cattle hides and wet blue equivalents. This truth tells us two things, Chinese tanners need hides and U.S. hide suppliers sold ahead positions have grown smaller over the last month or so. It is expected that cattle slaughter here in the U.S. will shrink as we head into the second half of July and through most, if not all, of August. Hot weather means less demand for beef we are told. This means packers will have fewer hides to sell for now, which could help them keep prices for those hides at current levels. Without some renewed interest from tanners in China and in Korea for that matter, current price levels for hides will be hard to maintain. For now, it looks like a lack of raw material inventory and outstanding sales by tanners will be the norm. After the last few weeks of rather slower sales, it feels like raw hide and wet blue prices will have to continue coming down little by little to get tanners interested in buying. Even the most sought after selections, those which have the best grain quality, have seen tanners putting downward pressure on their value. It needs to be mentioned, that the lack of sales that were consummated last week was not the result of lack of orders for U.S. hides, but rather the inability of sellers and buyers to agree on price.
Golf Quote
It is statute and ordained that in na place of the Realme there be used fute-bal, Golfe, or uther sik unprofitable sportes.
-James IV of Scotland, 1491
