It was a rather quiet Monday with not a lot of activity reported. The general consensus seemed to be that the market had crept higher and higher throughout the last month and now, with the higher prices, people were waiting until later in the week to buy what they need. One source summed it up well by saying some of the buyers are experiencing “sticker shock”.

Market activity picked up on Tuesday with a fair number of trades reported. Prices were up on several selections, most notably heifers with packer brands at $55 and $57 and natives at $57.

Comparing Tuesday’s prices to 2008, HTS, BBS, and HNS were within a dollar or two ranging from $65 to $68. This year CBS were $58 while in 2008 they were $62, which suggests that Colorado steer hides are behind in terms of product value and we will likely see their prices change.

A moderate number of sales was reported on Wednesday—predominantly packer hides. The mood of the market was slightly sombre and grudgingly steady, which was reflected in trades reported.

The hide market on Thursday was very quiet with several people noting that volume was off from the previous week. In general, prices appeared to be holding steady; within the week’s trading range. The quantity of trades was light for a Thursday.

Trading on Friday was busier than Thursday with a modest number of sales reported. Prices remained steady with reports fitting within the week’s trading ranges.

Steer prices up

For the past several weeks, suppliers have had an easy time selling their requirements in only a couple of days of business. Last week was not expected to be much different; however, people were beginning to wish the market could find some stability. Although there was a chance it could have traded up again, some suppliers said they wished it wouldn’t. The constant upward movement of hide prices is of great concern to tanners who have not been able to increase leather prices proportionately.

In the past month the hide market has increased to levels tantamount to the winter of 2008. A few people have used the past historic market levels as an indication that the market is undervalued. The other side of this position is the economy is much less robust now than it was then. Whether the market will reach its past highs is in question, but the fact remains that since early January steer prices have increased by around 10% and cows considerably more.

Higher wet blue sales

Thursday’s USDA whole hide and wet blue export report for the week ending 28.01.10 showed a significant bump in sales from previous weeks, surpassing slaughter for the first week this year. Combined hide and wet blue sales were 732,700 against a slaughter of 625,000. These higher numbers were expected to happen the previous week, but low combined sales of 504,100 surprised pundits who had forecast numbers as high as 800,000. Likely some of the reports on sales during the week ending 20.01.10 carried into this USDA report.

Wet blue sales were 186,900, up considerably from the previous three weeks. This year, average weekly wet blue sales currently stand at 113,325. For the week, wet blue shipments were 145,200, up around 15,000 from the previous week. This year, January’s wet blue shipments averaged 138,425—nearly the same as 2007 levels, which averaged around 138,460. The new figures were clearly ahead of last year’s 113,460 weekly wet blue average shipments.

Keeping in mind that this year??s trend of blue shipments only covers four weeks, wet blue business is beginning to show some signs of promise. If you look at the yearly wet blue sales total or average, you might conclude that sales are behind shipments, which will eventually lead to lower shipments. The fact is this year’s sales include a very slow start of about 30,000 for the first week in January that may turn out to be an anomaly. Is it possible last week’s large wet blue sales numbers might be a sign that blue business is heating up? It will be interesting to see if these numbers are sustainable.

Other news

The proposed changes for Mexico hide and skin import regulations that were scheduled to take effect on February 1 have been postponed. We received information that US and Mexican authorities were still working on the regulations and any changes will not be made before March 31.

The economy is back at the forefront of the news. As more people are losing confidence in the economy, stocks tumbled on Thursday. The DJIA fell 263 points or 2.6% on Thursday and 723 points or 6.7% since January 19. Leading the bad news was an unexpected increase in the number of people in the US filing for unemployment and riding debt levels in Europe. Friday’s newly released lower unemployment level of 9.7% did little to ease investors’ concerns.

Although the health of the leather and hide business is closely linked to the economy, the hide market currently appears to be oblivious to the recent sentiment in the equities markets. Last week’s hide market prices remained relatively steady. Several packers said business for the week was good. Traders were a little less bullish with a few noting business was slower than it had been in previous weeks.

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