Trading in the early part of last week was quiet but seemed to pick up on Thursday. However, even with the pick-up, expectations were that business would be softer than in the previous week. Interest remained on bargain material and this was a good opportunity for processors to clean up as buyers looked for cheaper alternatives to $38/$39 steers. The cow market was reported better, but did not see the flurry of increases that steers did. This is understandable since they are destined for different outlets.

Trading on Thursday was heavy with prices spreading the range in several selections. Butts were reported up slightly ranging from $29 to $32—still considerably under HTS. Normally one would associate price and quality of the two selections. Cows in several selections appeared to be increasing, notably HBC rose from a range of $8/$13 to $12/$17. A few upper-end sales were reported on Wednesday, but orders were for smaller quantities and extended deliveries. Overall business was slow to steady, with packers holding back on offers. There were few trades on Wednesday. Branded steers were steady as well as NHNDC, while light HTS and CBS reported up and HBH down.

Tuesday was very quiet again, with trading coming in at mostly softer levels as was the case with HNS and HTS. BBS were reported slightly stronger. Trading Monday was also relatively light but prices remained firm in general. A packer HNS 62/64 reported at $39 while packer HTS ranged from $34 to $37 and HBH from $23 to $26. Branded steer were down a bit at $26 to $33 while heavy CBS traded $7 up at $28.

High hopes

The Thursday USDA report had 859,000 combined hides and wet blue exports for the week ending June 4, giving last week’s market a boost. With prices up by more than $10 over the past several weeks, many pundits were predicting that the rally had run its course and was ready to stabilise. But with these large sales numbers and the continued rundown of US hide inventories, the market might not quite be ready to rest. The current state of the leather business does not seem healthy enough to be driving the increased sales and shipments much less support recent increases in prices, yet this is what has occurred over the past several weeks.

Where the market will go from here is difficult to predict. Clearly it is firm and offers will probably be held back next week given the strong position of packers. There is resistance on prices above $43/$44 C&F Asian port which will probably continue next week, especially if tanners have replenished their stocks. Market direction will have a lot to do with sales and shipments reported this coming Thursday, so stay tuned. Although the recent rally in steer prices has not largely impacted all selections of cow hide demand, beef cow hides have realised a significant increase over the last couple of weeks.

In the US’s largest export country, China, business has slowed down over the last two weeks. The auto industry is still in the dumps and tanners comment that they see no basis to support the current market levels. Traders are hoping leather business will pick up with the seasonal change but concede that there is resistance to higher prices from tanners, especially taking into consideration that leather prices will not support them.

International market

London

This week was similar to last week in terms of inquiries; however, whatever business was concluded was at slightly higher levels. The hide supply in Europe remains low and this, coupled with tanners’ low stock positions, is pushing the prices along. The increases are not massive but have averaged about a dollar or two a week over the last six weeks. The supply does seem to be a major factor in UK/Europe and if this does not improve then it is likely that prices will continue to increase week by week. However, if the numbers start to improve then this should lead to a levelling off. UK prices for 30/32 kgs were at $38-40.

Australia

The increase in currency strength against the US$ is requiring increases in prices in order to maintain margins and this is causing resistance. At lower levels, business can be concluded for all selections and weight ranges are leaving a sense that there is an underlying demand for raw material. All in all, prices continue steady.

Drop splits remain in good demand and prices are holding. Although some feel that they may be able to push prices up slightly, concern that customers might go elsewhere is keeping prices in check. One trader expressed: “A reasonable sale is a good sale.”

In other news from Australia, last week the Brazilian owners of Swift Australia were on hand to break ground for a new $22 million hide-processing plant in Ipswich, Queensland. Swift Australia officials said the new plant will not be a tannery and the plan is to process 1.5 million sales hides a year for the export market.

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