U.S. Steer raw hide and wet blue hide suppliers held firm on their asking prices last week, and that mind set allowed them to hold prices steady for the week. But, this stance also appeared to limit the volume of business that they could put together. In the meantime, Fed cattle processors were able to pull in record per head profit margins last week, as the price for Fat cattle dropped a good bit more than wholesale beef prices. According to analysts, this allowed packers to reap those record per-head profit margins. Packers responded to the opportunity by harvesting the highest weekly number of cattle this year. Taking this into consideration, there can be little doubt that Steer/Heifer hide producers lost a good chunk of their sold ahead positions last week. U.S. Cow hide suppliers fared a little better last week than U.S. Steer/Heifer suppliers. The Cow guys could hold prices on their Dairy Cow hide productions, and some were actually able to move their sales prices up on their Plump Cow hide selections, both Native and Branded, by $1.00. From the tanner’s side, the story reminded the same as it has for some time now. Upholstery leather orders, for both furniture and auto remained okay. Handbag leather orders are also not bad. But, demand for leather from the shoe sector is well below expectations. Some shoe leather tanners say that their orders are off by 30 to 40 percent. These may be exaggerations on the tanner’s part, but where there is smoke there is fire. Or, in this case, lack of shoe leather orders. The Export Sales Report released by the USDA last Thursday brought us another surprise. After several weeks of large per piece sales to Thailand, the Export Sales Report showed a big negative number for Thailand sales last week. Oh well!
The Export Sales Report released by the USDA on June 8, 2017 stated net sales for export of a whopping 665,200 U.S. cattle hides and wet blue equivalents for the 7-day period ending Thursday June 1, 2017. This number is large but still down from the already large 870,200 pieces reported to have sold for export during the previous week. China was the number one buyer with 388,000 units purchased. Korea retained it second place buyer position from the prior week with 95,600 units booked. Thailand was the third biggest buyer ordering 77,300 pieces.
Federally Inspected Slaughter (FIS) of cattle for the week ending Saturday June 17, 2017 was estimated to be 628,000 head. This total was the second largest weekly number of the year. For the same week, last year, the FIS was 593,708 cattle. Year-to-Date cattle slaughter is estimated to be up 5.7 % from a year ago.
We have got to be looking for another nice week for U.S. Beef packers. They have enough room in their profit margins to continue with aggressive slaughters, and no doubt they will be. However, we can’t imagine them able to process any more cattle than they did last week. We feel that they ran close to capacity last week, and if beef producers speed up the chain and production line, they risk burning out their workers, who are very hard to replace these days. As for hide demand, we do not think tanners have their normal levels of raw material inventory and therefore they can’t stay out of the market for long. But, we still expect tanner’s bids to be lower this week, the question is will U.S. Steer hide suppliers be forced, because of their shortened sold ahead positions, to except those lower bids to move product they will want to sell? After all, we are headed into the “Dog Days” of summer.
GOLF TRUISMS
If you seem to be hitting your shots straight on the driving range, it’s probably because you’re not aiming at anything.
Your straightest iron shot of the day will be exactly one club short.
