Where are the Chinese tanners? Seems like they are hibernating. What will all this this talk about tariffs and trade wars have on the hide market? Why can’t we get an Export Sales Report from the USDA that makes sense to us? When will the demand for footwear leather pickup? Have U.S. Cow hide prices hit the bottom? The hide market has left us with more questions than answers recently. We expected last week to be a little more active in the U.S. hide market, but without much demand coming from China we would have to call it a subpar week volume wise. Despite that being the case, U.S. Steer hide prices held steady last week giving up $1.00 per piece at the most, with most U.S. Steer hide suppliers claiming that they had comfortable sold ahead positions. From what we could tell U.S. Cow hide suppliers were able to turn down any bids last week that were below their last trading levels. Tanners in China continue to insist that U.S. Steer hide prices must decline because of lack of demand, which is linked to the disappointing performance from the shoe sector. However, we did get reports from several U.S. raw and wet blue hide suppliers who have recently been traveling in Asia saying some of their customers appeared to be busy, which even included some shoe upper leather tanners. As last week progressed a lot of negative news was generated. The U.S. stock market took a beating with the Dow off about 5 percent for the week, This down turn, according to those who are supposed to know, was related to trade war fears resulting from the Trump Administration proposed tariffs on Chinese imports. Last week’s quarter percent increase of the Fed rate and changes in the President Trump’s cabinet which indicates a more hawkish approach to North Korea, Iran and Russia. All these factors bring uncertainty into markets and markets don’t like uncertainties. Last week’s Cattle slaughter here in the U.S. moved up to just over 600,000 head number. This is what we expect to see, weekly slaughter over 600,000 head going forward, and growing right through the Spring months. The Export Sales Report released last week by the USDA for raw and wet blue hides left many in the trade scratching their heads again. As for our call on the FOB plant values of seasonal average weight Big Packer Steer hides: We are leaving the Heavy Native Steer hide at $65.00 per piece and moving our Butt Branded Steer quote down a $1.00 to 59.00 per piece. Our call on the seasonal average Big Packer Heavy Texas Steer hide selection is at between $50.00 and $52.00 per hide FOB plant basis.
The Export Sales Report released by the USDA on March 29, 2018, for the seven-day period ending Thursday March 22nd, stated that a net 747,100 whole cattle hide, and wet blue equivalents were sold for export during that week. This number is close to three times the 262,300 pieces reportedly sold during the prior week. China was the largest buyer, booking 478,300 pieces or 64 percent of the sales number. Exports/actual shipments during the seven-day period ending March 22nd was a health 635,200 unites.
Federally Inspected Slaughter, (FIS), for the week ending Saturday March 24, 2018, was an estimated 607,000 cattle. This number is up slightly from the prior week’s estimated 595,000 head slaughtered. Year to Date FIS is estimated to be 7,013,000 Cattle, which is up an estimated 2.0 % for the same period a year ago.
Will this be the week that that the standoff on U.S. Steer hide prices ends? We’ve got to believe that the Asian tanners need to replenish their Steer hide inventory and that U.S. Steer hide suppliers need to improve their sold positions. U.S. Steer hides are not what one would call historically expensive but the tanners for assorted reasons say they feel U.S. Steer hide prices should go lower. Our feeling is that if there is any movement in Steer hide prices this week it will be minimal. Although both sides of the U.S. Steer hide equation need to do some business, we have a tough time convincing ourselves that this will be the week a sizable amount of business is done. U.S. Cow hide prices, in our opinion bottomed a week ago and suppliers of these hides are going to hold to their prices.
MULLIGAN’S LAWS
Whenever you play in a mixed foursome, there will always be at least one hole where you have to hit your second shot before the ladies tee off.
