The U.S. Hide Market remained confusing last week. The feeling was that a number of hides were traded during a holiday shortened week in the United States, where we celebrated our Independence Day. It was very difficult to come up with a number that one could call the market price for any particular hide selection, be it Heavy Native Steer or Heavy Texas Steer, etc. The reason for the confusion was the fact that some tanners in China and Korea were insisting on suppliers selling them hides at lower levels to allow them to average down the cost on their outstanding contracts, before opening their L/Cs for previously outstanding contracts. There were also some questionable quality and shortage claims being filed by certain tanners. Many saw this as tanner’s attempts to strengthen their bargaining positions. Over the last few weeks hide prices on some Steer hide selections have come down by as much as 20 percent. This recent drop cannot completely be attributed to lack of leather business, the decline in drop split prices or tight credit/cash flow. Rather, it is the result of tanners not living up to the contractual agreement they made with hide suppliers. Again last week, there were like the previous week, (see U.S.D.A. Export sales report below), a good number of hides traded. Like the previous week, U.S. Big Packer Steer hide sales prices either rumored or reported, were down another $2.00 to $4.00 per piece. As of today, we would put the price of Big Packer Heavy Native Steer hides between $78.00 and $80.00 per piece, and the price for Big Packer Butt Branded Steer hides between $76.00 and $78.00 per hide, both FOB plant basis. Big Packer Heavy Texas Steer hides were said to have sold at levels between $68.00 and $70.00 per piece FOB plant. Sales of Plump Cow hides were limited and prices were down by 10 percent from two weeks ago. Dairy Cow hides seemed to find more interested buyers, and sale prices like those of the Plump Cow selection, were down from previous sales levels by less than 5 percent.
The Export Sales Report released by the USDA on July 2, 2015 for sales made during the week ending June 25, 2015, showed that 641,300 cattle hides and wet blue equivalents were sold for export. This number was up 17 percent from the previous week’s reported sales number of 548,200 pieces. China/Hong Kong purchased 244,200 units making them the number one buyer.
The Federally Inspected Slaughter (FIS) for the week ending Saturday July 4, 2015 was estimated to be 521,000 cattle, down from the previous week’s estimated FIS of 555,000 head. The FIS for that same week last year was 493,000 animals.
On the positive side for U.S. Steer hide suppliers, the slaughter number in the U.S. is not going to go up in the foreseeable future. This means kills will remain about 7 percent below a year ago levels. Tanners who need U.S. Steer hides to produce leathers demanded by customers, will have fewer of these hides available to them. Also, the recent reduction in the price of these Plump hides, has for sure caught the eye of leather buyers. One must think that these price declines will result in an increase in the number of leather orders to tanners. On the negative side for U.S. hide suppliers, is their concern regarding the contractual performance by some Chinese tanners, and some of the less reliable Korean tanners. The bottom line is for the hide market to stabilize. Tanners need to take delivery of their outstanding contracts in order to relieve congestion at supplier’s warehouses.
Mulligan’s Laws
- It’s not a gimme if you’re still away
- Over time, any putter can reach a temperature of absolute zero
