Last week was another decent week for U.S. Steer hide suppliers. They were able to sell what they had on their offer lists at no less than steady prices. It seemed that a good deal of the sales were again to Korea whose tanners have been active buyers for a few weeks now. Sales to China on the other hand have not been up to expectations as tanners there continue to battle numerous issues from environmental problems and reduced drop split values to tight credit and slow leather sales for China’s domestic market. The Steer hide sales prices remained steady throughout the week, with the exception being the Heavy Texas Steer hides which did move up a dollar or two, depending on origin, to between $84.00 and $85.00 per piece FOB plant basis. The other big packer Steer hide values were unchanged at $95.00 to $96.00 per hide on Heavy Native Steer hides and $94.00 for Butt Branded Steer hides, both FOB plant. Dairy Cow hide sales picked up last week as more buyers entered the market. There were plenty of bids coming out of China for Dairy Cow hides, but a high percentage of those bids were below what suppliers would accept and what other export destination buyers were bidding. Most suppliers indicated that they were comfortably sold ahead on their Dairy Cow productions. There did not appear to be much business done on the U.S. Plump Cow hide selections as they continued to compete with similar productions from Australia and Europe. The fact that the tanners in Northern China continue to have production stoppages and slowdowns for environmental reasons has also hurt demand for Plump Cow hides and related raw materials in general.
The Export Sales Report released by the USDA on May 21, 2015 for sales made during the one week period ending May 14, 2015, showed that 511,800 cattle hides and wet blue equivalents were sold for export during the period, up slightly from the previous weeks reported sales number of 495,100 pieces. Korea for the first time in a long time was the number one buyer booking 257,300 units, almost all of those raw hides. China/Hong Kong was the number two buyer, taking 236,200 hides and wet blue.
The Federally Inspected Slaughter (FIS) for the week ending Saturday May 23, 2015 was an estimated 566,000 cattle, down slightly from previous week’s estimated FIS of 569,000 head. The FIS for that same week last year was 604,631 cattle. Year to date the FIS is down 7.1 percent or 846,000 cattle.
The U.S. hide market for the last three to four weeks has, for all intents and purposes, been steady. Although one gets the feeling that all involved in the hide and leather businesses would like it to stay that way, we all know markets by their nature feel a need to move either up or down. The direction the U.S. Steer hide prices will move now is anyone’s guess. On the supply side we pretty much know that things will not change much. Yes there are a few more cattle on feed in the U.S., but that is for a big part because they are being kept on feed longer due to cheaper corn and no resistance to processing heavier weight cattle from the packers. We can expect the FIS to continue to remain at current levels. There seems to be enough demand for Steer hides to keep the ball rolling. For Plump Cow hides, China is the key to which direction this market goes. Unless purchases from the Chinese tanners picks up, it will be hard for Plump Cow prices to hold their own. Dairy cow production and demand looks to be in sync going forward so don’t expect to see much change in those prices.
Mulligan’s laws
- A ball you can see in the rough from 50 yards away is not yours.
- A ball will always travel farthest when hit in the wrong direction.
