This past week was a slow one. Lack of meaningful bidding by tanners was the main reason that only limited business was put together on U.S. raw and wet blue hides last week. Bids within $1.00 to $2.00 per piece off the prior week’s sale prices were either booked by sellers or countered at reasonable levels. U.S. Federally Inspected Cattle Slaughter came in over 630,000 head last week. Although that was expected, that number did not enhance hide sellers’ positions with their tanner customers. With big packers trying to do more direct business with larger tanners, it is difficult to say just how many hides and wet blues were sold last week. But, we can say with confidence that the sales number did not come anywhere near the slaughter number. We read that both China’s imports and exports were up over 10 percent through June of this year from a year ago. This reflects continued growth in the Chinese economy. But, we continue to hear from tanners in China that their business is poor. Will the resilient Chinese economy pull up the tanning industry? Let’s hope so, we are told that a rising tide floats all boats. Because of the decline in the values for all the U.S. plump hide selections, we must revise our FOB plant prices for Big Packer and equivalent seasonal average Heavy Native Steer hide to $64.00 per piece and the Butt Branded Steer hide to $63.00 per hide. We are calling the Big Packer seasonal average Heavy Texas Steer hide FOB plant price to be between $58.00 and $60.00 per hide, depending on origin. U.S. Cow hide sales, like the Steer hide business, slowed a good bit last week. The sale prices for all the Cow hide selections were under pressure, and the prices for product sold last week were off anywhere from $1.00 to $3.00 per piece.
The Export Sales Report released by the USDA on July 13, 2017 for the 7-day period ending Thursday July 6, 2017 showed that 356,100 whole hides and wet blue equivalent were sold for export during that week. However, we question the accuracy of this report, because the USDA had a computer glitch and some of those required to report were unable to submit their sales and shipment information by the reporting deadline.
Federally Inspected Slaughter (FIS) of cattle for the week ending Saturday July 15, 2017 was an estimated 637,000 cattle. For the same week, last year, the FIS was reported to have been 598,164 head. Year-to-Date FIS is estimated to be up 5.9 % or 930,000 cattle from a year ago.
Still looking for a big week of sales to put a bottom in the U.S. hide market, we are hoping this will be the week. We expect cattle slaughter to remain over 600,000 head this week as packers continue to record nice returns on every head they process. Tanners need leather orders, but a weaker hide market will not help them in their negotiations with leather buyers. So, putting a bottom in the market would be beneficial to all concerned. This type of a market also tests the integrity of the players. Let’s see how things work out.
Have a good week.
GOLF QUOTE
“Golf takes more mental energy, more concentration, more determination than any other sport ever invented.”
– Arnold Palmer
