Last week was a slow one for the U.S. hide market. From what we could tell, there was not a lot of business done between U.S. raw hide or wet blue hide sellers and their tanner/customers. For U.S. Plump Steer and Heifer hides, there did not seem to be enough activity in the market for suppliers to sell a week’s production. However, recently when the USDA Export Sales Report is released for one of these “slow sales weeks”, the number of pieces sold is a substantial number, even though we know there was not much activity that week. In addition, the USDA is reporting weekly shipments for these weeks in question are at good levels. So, we must ask ourselves what is going on? Well, the only explanation we can think of is that a sizable number of U.S. hides are being sold to end users outside of what we might call traditional channels, meaning that U.S. hide and wet blue producers seem to be marketing a larger percentage of their productions directly to tanners, bypassing their older, more traditional marketing channels that evolved hide traders and dealers. Albeit this marketing by producers is most likely to a limited number of larger tanners, but the impact is that more business is done quietly, in bigger chunks. U.S Big Packer Steer hide sales prices covered a wider range last week. Seasonal average selections of Heavy Native Steer hides traded in a range of $66.00 to $67.00 per piece and Butt Branded Steer were reported to have sold within a range of $64.00 to $65.00 per hide, both selections on FOB plant basis. As for the seasonal average Big Packer Heavy Texas Steer hide selection, we are putting its FOB plant value at between $61.00 and $63.00 per piece. U.S. Cow hide suppliers fared better last week than did the fat cattle hide and wet blues sellers. All the Cow hide selection sold at levels that were steady to up $1.00 per piece.
The Export Sales Report released by the USDA on June 22, 2017 for the 7-day period ending Thursday June 15, 2017 stated that a healthy 578,400 whole hides and wet blue equivalent were sold for export during that week. This number is up from the 536,000 pieces reported to have sold the prior week.
Federally Inspected Slaughter (FIS) of cattle for the week ending Saturday June 24, 2017 was estimated to be 632,000 head. This number was up slightly from the 628,000 animals processed the prior week. For the same week, last year, the FIS was 608,000 head. Year-to-Date cattle FIS is estimated to be up 5.7 % from a year ago.
Again, we are left wondering what this week has in store for us. Will tanners finally get the leather orders they have been waiting for and look to buy hides, or will we have another quiet week? With the U.S. big packers continuing to bring in record profits, we will see the slaughter number remain well above 600,000 head, which should mean that packers and processors will need to move some product. If tanners are telling the truth about the lack of leather orders then basic economics would tell us we should see prices down somewhat this week. What has left us scratching our heads is that this above formula has been played out for the last several weeks and prices have not gone down. On the contrary, steer prices are at or slightly above a month ago and cow prices are $2.00 to $4.00 higher. The only plausible explanation is that the larger Chinese tanners business is better than they are saying which would mean prices will be more of the same this week.
GOLF QUOTE
“If profanity had an influence on the flight of the ball, the game of golf would be played far better than it is.”
– Horace G. Hutchinson
