The All China Leather Exhibition (ACLE) has come and gone, but it did not appear to have given us the answer we were looking for as to which direction the U.S.A. hide prices will be heading moving into the fall. The general feeling was that there were fewer attendees at this year’s show than last year’s edition. There were of course some productive meetings for those marketing U.S. hides, and some sales reported to have been booked. Transaction prices in our opinion were mainly at steady levels, but volume seemed to be lacking. The USDA’s U.S. Export Sales information released last Thursday for the week ending August 24th showed that many U.S. raw and wet blue hides were sold during that 7-day period. That week coincided with the time that many U.S. sellers were traveling throughout Asia calling on their tanner customers. Some of those suppliers must have been able to put a sizable number of sales on their books while they visited customers. Pollution control problems for Chinese tanners remained a point of discussion last week. Reports of pressure came from the Chinese government for offenders to clean up their act. Most affected by this growing cleanup effort are the smaller tanners with antiquated effluent clean up systems. In the long run, this government action will favor large tanners with effective effluent processing systems and the ability to construct such systems. Cattle slaughter here in the U.S. continued to run as it has for the last 6 weeks. We don’t see that pattern changing much for the next few weeks. U.S. Beef Packers still are bringing in large per head profit margins. Fed cattle prices are down, and beef demand both domestic and export, remain okay. We mentioned above, that we felt last week’s prices for U.S. hide to be mostly steady. However, there were sales reported to the various reporting services, that were at lower levels. We will call the U.S. Big Packer Heavy Native Steer hide price at $ 60.00 to $62.00 per piece FOB plant, which is down. We are going to call FOB plant price for the Big Packer Butt Branded Steer to be $55.00 to $57.00 per hide, unchanged, and has been for some time. For the Big Packer Heavy Texas Steer hide, we need to widen the price spread to between $48.00 and $51.00 FOB plant basis. Demand for U.S. Dairy Cow hides seemed to have picked up a little last week, but that most likely was the result of a lack of activity in this sector over the prior couple of weeks. In our eyes, prices on Dairy Cow hides were steady. For the Plump Cow hide sections the market was mixed. Demand from Native Cows was strong enough to maintain price levels, but Branded Cow hide prices seemed to be under a little downward pressure which suppliers resisted.
The Export Sales Report released by the USDA on August 31, 2017 for the week ending Thursday August 24th indicated that 635,800 whole hides and wet blue equivalents, were sold for export during this period. This is up from the 590,100 pieces reported to have been booked the prior week. China was credited with buying 348,400 of the units sold and Korea was reported to be the second largest buyer purchasing 100,000 raw and wet blue hides during that 7-day period.
Federally Inspected Slaughter (FIS) of cattle for the week ending Saturday September 2, 2017, was an estimated 622,000 head, down slightly from the prior week’s 639,000 head. Year-to-Date FIS is estimated to be up 5.8 % from a year ago.
This week started off with our Labor Day National Holiday here, so most if not, all offices were closed on Monday. With no clear feeling coming out of last week’s ACLE show in Shanghai as to which direction U.S. hide prices are headed, we will continue to search for that answer this week, and possibly over the next few weeks. Leather demand is the key. According to reports, U.S. hide supply/cattle slaughter is expected to remain reasonably unchanged for the near term. Of course, things can happen that would change that prediction, but you can’t plan for such things, markets don’t allow it. We guess everyone who is part of the leather market, raw material suppliers, tanners, and leather manufacturers are all hoping to see demand for leather increase. This would be good for all concerned. Leather demand will increase, the question is when.
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