There were what seemed like a lot of bids in the market for U.S. hides and wet blue equivalents last week. Even though many of those bids were at levels that sellers found to be unattractive, we felt like there were enough orders that did meet producer’s expectation to allow them to move a week’s or near a week’s production. Prices for Steer hides traded were up $1.00 for the Holstein selection, and steady to down as much as $2.00 for some of the Plump Steer hide selections. The price levels for all the U.S. hide selections are at their lowest levels that we have seen in a number of years. This may be at least part of the reason that interest in U.S. hides was again, more broad based last week. Tanners all over Asia continued to complain about a shortage of leather orders, while the Chinese tanners added poor drop split prices and banking problems to their reasons for lower bids. Some of the Chinese tanners were making the lowest bids, and were for the most part the interested parties whose bids did not yield purchases. Through it all, the interest in U.S. Holstein Steer hides grew again last week as tanners everywhere must look for better grading raw material. As always, even when leather demand is down, tanners can still sell top end, full grain, naked leathers, and that means they need hides that will give that result. As for last week’s Plump U.S. Steer hide prices, we have to say they dropped a maximum of another $1.00. So we are going to put the FOB plant values of the seasonal average Big Packer Plump Steer hide selections as follows: Heavy Native Steer hides at $71.00 to $72.00 per piece, Butt Branded Steer hides at $69.00 per piece. As for the Heavy Texas Steer hide selection, we are moving that price range down $1.00 on the low end of the range, $63.00 to $65.00 per hide. The U.S. Cow hides, like the Steer hide selections, found more buyer interest last week. The values for the Spready/Dairy type hides were down $1.00 to $2.00 while the sales prices of U.S. Plump Cow hides, both Native and Brands, were at basically steady money. Cattle slaughter in the U.S. last week moved a tiny bit, pushing it closer to the 600,000 head number. That number is expected to be the highest for now. Most of those added animals in the slaughter mix were and will continue to be Steers and Heifers.
The Export Sales Report released by the USDA on April 28, 2016 covering sales made during the week ending April 21, 2016 showed that only 431,300 cattle hides and wet blue equivalents were sold for export during that week. That sales number was lower than most sellers expected and down a lot from the prior week’s 641,600 pieces sold. China was the biggest buyer reportedly taking 202,200 units. Korea was the second largest buyer with 131,600 hides and wet blue equivalents purchased.
The Federally Inspected Slaughter (FIS) for the week ending Saturday April 30, 2016 was an estimated 590,000 cattle, up just a tick from the prior week’s estimated FIS of 587,000 animals processed. For the same week last year the FIS was 563,843 head. The Year-to-date FIS cattle slaughter is estimated to be 9,437,000 cattle which is 125,000 or 1.3 percent above last year’s to date count.
Asia is out for the May Day Holiday today, Monday, but we don’t think that will have any impact on the U.S. hide market. Four days is enough for raw hide and wet blue sellers and buyers to get done any business they feel they need to do. We expect U.S. cattle slaughter to edge up again this week, maybe reaching that 600,000 head number. U.S. Fat cattle processors, who are reported to be making decent margins now, are expected to add to their weekly slaughter numbers this week. Cow processors for the time being see no increase in the number of cattle they will be harvesting. Based on the number of bids for hides and wet blues that were left unfilled last week, we can expect there will be good buyer interest again this week. The question is, are the current hide prices low enough to generate the business needed to put a stop to their weekly declines? It seems all involved, producers, traders, and tanners, would not like hide prices to move any lower. We have to believe a bottom in hide prices would make business easier for all concerned. It is good to remember, that if we look back over the last five years or so, today’s hide prices are what we would have to call low. We are expecting this week to be like last week, a lot of interest, and a good week of sales put on the books.
Golf Quotes
“Golf’s a compromise between what your ego wants you to do, what experience tells you to do, and what your nerves let you do.” – Bruce Crampton
“The person I fear most in the last two rounds is myself.” – Tom Watson
