One of the Big U.S. Packers pulled the rug from beneath the U.S. Steer hide market last week. Apparently they needed to move a good number of Steer hides and to do so they lowered the price they were willing to accept for their Steer hide selections. That move by one of the big four Fat Cattle processors forced all other Steer hide suppliers to closely look at their sold ahead positions and to accept bids that they had previously ignored. The result, from all reports, was that a large number of U.S. Steer hides were sold during last week at prices that were down $2.00 to $3.00 per piece from the prior week’s levels. The bulk of the buying continued to be by Chinese tanners. A fair number of Korean tanners, who had been inactive in the market for weeks, did buy some raw material. All Asian Steer hide tanners continued to complain about fewer and lower-priced leather orders in the shoe sector. Chinese tanners also continue to complain about tight credit from their banks, but L/Cs for the most part were being opened in a timely manner. By the close of business last Friday we would put the Big Packer U.S. Steer hides prices at the following levels: Heavy Native Steer hides at $67.00 to $69.00 per piece, Butt Branded Steer hides at $66.00 to $67.00 per piece both price ranges are FOB plant basis. Putting your finger on the value of the Heavy Texas Steer hide selection is very difficult, it depends on so many factors such as packer, average weight range, and cattle point of origin. This selection has, over the past few years, been bastardized by some of its suppliers and now is being beaten down by users. As of last Friday we would put the value of the Big Packer Heavy Texas Steer hide at between $58.00 and $60.00 per hide FOB plant, which is a far cry from its value of yester year. U.S. Cow hide suppliers fared much better last week than their Steer hide selling cousins. Good interest in all U.S. Cow hide selections, be they plump or spready, were seen last week. A good amount of the interest in these items came from the Chinese upholstery leather tanners. Really don’t think any supplier had to take more than $1.00 off its previous sales price to move whatever quantity they may have wished to sell.
The Export Sales Report released by the USDA on October 22, 2015 covering the week ending Thursday October 15, 2015 indicated that 453,700 cattle hides and wet blue equivalents were sold for export during that week. That total is up considerably from the 337,900 pieces reportedly sold the prior week. China was the big buyer taking 333,200 of the hides and wet blue sold during the period.
The Federally Inspected Slaughter (FIS) for the week ending Saturday October 17, 2015 was an estimated 556,000 cattle. This number was down from the prior week’s estimated FIS of 576,000 head processed. For the same week last year the FIS was 577,840 animals. Year-to-date FIS is down 6 percent or 1,460,000 head from a year ago.
Did U.S. Steer hide supplier’s book enough business last week to allow them to turn down the lower bids that buyers will surely throw at them this week? The answer to that question will tell us if the hide market has found a bottom, at least a temporary bottom, or not. U.S. Steer hide prices are off by over 40 percent or over $45.00 per hide from a year ago levels and U.S. Cow hide values have dropped by near the 40 percent amount as well. We know that we are headed into the time of the year when cattle slaughter here in the U.S. will seasonally decline. Coupling that with the lower hide values mentioned above would give one the impression that hide prices are low enough. But, tanners continue to say that leather demand is down and we know from history that lower leather prices will in time increase demand for leather, but we also know that does not happen overnight. All we can do is wait for the sun to come up and hope it brings some leather orders with it.
More of Mulligan’s Laws
The more memorable the swing thought, the more useless the information it conveys.
Never teach golf to your wife.
