There were very few reported trades today. Most people are reluctant to peg the market this week as they hope for a bottom. A rising concern is the backlog of inventory that will take a long time to be worked down once tanners begin purchasing in earnest. The steers are moving for $33 to $35 FOB.

Everyone now knows full well that there has been a major readjustment in the American hide market this past month. Weekly, and sometimes daily, reductions in hide prices have been the norm lately, with most suppliers scrambling to sell and ship inventory are doing what they must to create new contracts at cheap prices or to renegotiate contracts they already have.

Being a hide producer or seller these days is a very tiring, frustrating and anxiety-driven chore. It is almost overwhelming for most participants to come to work every day to face the new challenges that come in with every email. We all hope the market will stabilise soon, while at the same time we are hoping that the market does not get any worse. Unfortunately for our industry, some experts believe things will get worse—at least temporarily—before they get better.

The potentially worse scenario is based on the fact that we are confronting the Christmas/New Year holidays here in the US as well as in Europe and Mexico, and Chinese Luna New Year will take place at the end of January. All manufacturers of leathergoods, as well as tanneries, have announced they are extending these holiday vacations even further because of lower product demand. Some have already announced they are extending the holidays from one or two weeks to three or four weeks.

These extended vacation days off will undoubtedly exacerbate the normal sales decline and shipping problems we always have at this time each year. All this means there will be fewer hides soaked and fewer hides shipped. Realistically, with packers only closing for one or two days, the holidays will equate to at least two extra weeks of hides being produced and not shipped, further adding to the glut.

As suppliers struggle with the challenges of where to sell and ship the current production of hides, they are also dealing with the problem of where to store the quantities of hides being produced that cannot be shipped. At every hide plant location there is a need to find suitable storage for hides that cannot be shipped as hide plants are so limited in storage capacity.

The good news in all this mess is that hide prices, particularly for cow hides, are at such historic lows that some users and even some producers are contemplating storing hides for the market turn-around that will have to eventually happen sometime in 2009. It is hard to imagine that branded cow hides, quoted at about $10 a piece FOB packing plant, can go lower. Some packers have stated that the cost of burying hides in landfills is about $2 per piece, while the cost to cure and palletise these cow hides is more or less $5.

Another positive we can point to is the growing attention tanners are giving to the buying of hides for tanning later in 2009. Surely every hide user now recognises that hide prices are at such a low value that tanners have to think about putting hides away for the future. Even if leather business is slow today, they all know leather demand will come back. The storage of hides, or even better, the conversion of hides into a long-term storage state of wet blue or crust leather is becoming more attractive every day.

Big packer sales reported today: HNS 70/Max at $35 or $0.39; HTS 66/68 at $33.50; BBS 70 Max at $33 or $0.3675; CBS 70 Max at $31 or $0.3450.

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