U.S. Steer and Heifer hide prices took another hit last week. The fact that the market was coming off three straight weeks of poor export sales as reported by the USDA, coupled with the persistent problems of tanners in Asia were the reasons for the market weakness. There were reports that leather orders have improved a little during July compared to June, but they could not counteract all the negatives for tanners. Those negatives reported by tanners, included that their leather prices are a little lower than last year at this time, and although split prices have steadied, they are considerably lower than a year ago levels. On top of these tanner problems we are being told that the Chinese government’s Environmental Department is upping its efforts to have tanners, throughout China, to conduct their business in a more environmentally acceptable way. This we have been told, has resulted in some tanners, in some of the tanning areas in China, to either shutdown or reduce soakings until they bring their facility up to acceptable standards. During last week, the FOB plant price of Big Packer Steer hide selections came down $1.00 to a maximum of $2.00 per hide. The Big Packer and equivalent Plump Heifer hides, both Native and Branded, were reported to have sold down $1.00 to $3.00 per piece depending on origin. So, we are going to call the FOB plant prices for the Big Packer Steer hides $74.00 to $75.00 per piece, and the Big Packer Butt Branded Steer hide price between $71.00 and $72.00 per hide. Packer Heavy Texas Steer hides were reported to have been traded as low as $67.00 per hide, to as high as $71.00 per hide, FOB plant basis. Either price seems like a stretch, but in opposite directions. The U.S. Cow hide prices, both on Plump and Dairy selections, also came down by about $1.00 per piece on an average. Some preferred origin Cow hides actually sold up by $1.00 but some less desired production lost as much as $2.00 per piece in their value.
The Export Sales Report published by the USDA on July 21, 2016 for sales made during the week ending July 14, 2016 indicated that an anemic 281,400 hides and wet blue equivalents were sold for export during that week. This number is even smaller than the prior week’s 330,700 pieces reportedly sold for export. China was the largest buyer with 165,500 pieces purchased during the week. The second largest purchaser was Korea with 49,400 pieces booked.
The Federally Inspected Slaughter (FIS) for the week ending Saturday July 16, 2016 was an estimated 595,000 cattle. This number is up from the 535,000 head processed for the same week last year. Year-to-date cattle slaughter is up 545,000 head or 3.4 percent from a year ago.
We look for the FIS weekly number for the time being to stay just about where it has been for the last month, hanging just below the 600,000 per week level. When we look at the rather poor raw hide and wet blue hide export sales numbers that have been reported by the USDA for the last month, we have to think hide suppliers would need to sell some product in the short term. At the same time, tanners who prefer U.S. hides have to be in a need to buy situation, as they have to be low on inventory. So with a seasonal increase in leather business, which we expect to see more of as we move into August, and the fact that August through October U.S. hides are historically the best grain quality hides that this country produces, we expect to witness a good round of business in the U.S. hide market very soon. Will it be this week, next week, or the week after next, we can’t say for sure, but it is on the way. When we add up all we hear, and what we can see, it may be necessary for hide prices to come down a little more to trigger buyer interest, but don’t think it will take much. Good luck and have a good week.
Golf Quotes
“Just because you’re nervous doesn’t mean you can’t hit great shots.”
-Paul Azinger
“I think that your mind will carry you. The mind controls the body. So if the mind tells the body what to do, it’ll do it. It’s just a matter of getting the mind under control to make your body respond.”
-Tiger Woods
