Buyers returned in force during the week ended October 15, procuring a large volume of hides. The increased interest seemed to be primarily with steers and better spread cow selections, leaving plump cows on the sidelines. Sources indicate that markets were well diversified with interest coming out of Asia, Europe and Mexico.

Suppliers were asking up prices, and with comfortable forward sales positions, they were willing to resist steady money. The market rose across the board around $1 for steer selections but higher on individual selections such as BS, which are up $2.50 at $52.50. Sources expected the momentum to carry over to the past week, thus making the market firm.

There was very little activity reported on Monday, in fact there was only one trade of branded steers for $56 at 70/72 pound weight. One source commented that packers will probably be asking higher prices on their selections as they find themselves in good positions. Furthermore, although the mood of sellers was upbeat, there were not many trades reported on Tuesday. A new high for HNS at $55 was reported along with several steer and cow selections at prices within the previous week’s trading range.

Wednesday’s reports were mixed with prices down on several selections but within the previous week’s trading levels. Cow selections appeared to take the brunt of the lower trades. Several suppliers noted that they were working on trades to be reported on Thursday.

There was interest from buyers to pick up the last of the fall hides ahead of the heavy winter pipeline, which is fast approaching, especially in better-quality hides. The tone among sellers continued to be positive with most expecting the market to end in an uptick in prices, particularly with certain selections.

Lighter weight Heavy Texas Steers, in particular, are over sold so, when available, may command a premium. Weights are becoming more of an issue and, with cattle weights for week ending October 3 at 1,317 pounds and assuming an average cured hide weights at 5% of live weight, steer hides on average are approaching 66 pounds. This is leaving the pullout for heifers in some plants down to negligible levels according to a couple packers. Across the board, light weights/heifers are currently in big demand with a very limited supply. On the other hand, jumbo hides are more plentiful and the bloom has fallen from the tree when it comes to premiums on these selections.

The market picked up a notch on Thursday with steer prices attaining new highs following the prior week’s high volume of sales. With suppliers, especially packers, in good forward-sales positions, many held back offers picking more lucrative trades. Although many buyers were resistant to higher prices, some needed material, thus edging the market up on limited trading.

A large number of trades was reported on Friday, above normal for a Friday. Thursday’s pattern of stronger prices carried over with a new high for branded steers and butt branded steers; however, several other steer selections were slightly down. Northern heavy native dairy cows had a new high of $40 reported.

Exports in line with expectations

The USDA export sales and shipments report for week ending October 15 validated the predictions made by industry pundits. For the week, whole hide and wet blue combined sales were an impressive 803,400 pieces, surpassing slaughter of 632,300 by nearly 171,100. Remarkably, the gross and net whole hide sales were very close with corrections less than 1.5%. The only adjustment of note was Hong Kong with a reduction of 4,900.

Export shipments for the week were not as impressive with whole hides and blue at 548,000, behind slaughter by 84,300 pieces but very close to the previous week’s shipments of 525,800. Cumulated shipments through week 42 this year are 26,721,200, within 0.5% of the same period last year shipments of 26,608,400.

Last week’s slaughter was revised upward from estimates of 629,000 by 3,300 pieces. Kills comprised 47.9% steers, 31.1% heifers, 19% cows and 2% bulls. The average live weight was 1,318 pounds, up one pound from the previous week.

Looking back a week to Thursday’s steer prices on the Jacobsen Price Guide, most selections are up around a dollar and a half, with the exception of Colorado branded steers which have not changed. Heifers have gone up more than steers with native heifers up over $3 at $42.50 and branded heifers up $2 at $38. Cows on the other hand remained mostly steady from last week with a few selections falling.

The market was expected to be firm for the week following the previous week’s large sales volumes. It met expectations. Sellers not needing to sell many hides took advantage of their good positions by raising prices on limited sales volume which moved the market up, particularly on steers and heifers. A few suppliers noted they were basically out of the market this week. On the other hand, one supplier reported that business was very brisk.

The international market

UK

This week again saw good inquiry for UK hides as tanners in China continued to concentrate on producing better-quality leathers. Price levels were unchanged and again we do not expect to see too much movement from these current levels (currency aside). Apart from improved interest for hides for shoe leathers we are also seeing upholstery tanners now becoming more active as well. The problem we have at present is the weaker dollar which could mean a price adjustment for this week’s offerings by a dollar or so.

China

Environmental issues in southern China’s Fujian Province are still developing with tanneries forced to run smaller capacity in order to be “qualified”. Some tanneries are beginning to look for beamhouses outside the region. Sources do not believe that it will have a negative impact on the US hide market and that tanners will find a way to work through the issues. There is reluctance, however, to consider new purchases for December/January shipments before they have some clarity and closure on future environmental regulations.

Leather demand in the domestic market remains good for Chinese tanneries but the market beyond the high season ending in December is not certain. Export shoe business is also much better than the lows but still lags from the highs of last year.

Some tanners are still looking for hides with some expressing an interest in buying before winter on the expectation that business will pick up. Others are still attempting to catch up on shortages caused by shipment delays from suppliers.

As of early this week, interest in US steer hides by most was $60 or less, C&F China port. It should be noted that several trades reported on Thursday exceed this mark when freight, commissions and interest are added.

Australia

As the currency continued to appreciate against the US dollar, suppliers were forced to increase their asking prices for hides. Due to shortages in supply, the domestic market is keeping pressure on prices as well.

Interest from Asia was steady with buyers continuing to purchase. Suppliers are finding some resistance to increases but are selectively seeing business, particularly in heavier weight hides with good substance and reasonable grain quality. One reliable source reported steady business in Europe with prices the same as the last few weeks, indicating a semblance of stability in the market.

Because of high cattle prices, most of the major meatworks have reduced their slaughter numbers by up to 25%. This lower level of kills is expected to continue with no expected improvement until well into next year.

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