The Week at a Glance:
- Steers lower on limited volume
- CLIA response to USHSLA/ICHSLTA
- China’s tanning sector posts gains
- Combined export sales 479,000
- Combined outstanding up 2%
- Combined shipments down 37%
- Slaughter exceeds sales/shipments
- Forecast: Lower
- Market observations: ”It ain’t over till its over”
Heavy Texas Steers down $2.00
Relatively little movement was seen in the countries most prodigious selection. As is typical in the current market environment, buyers idea’s were considerably below what packers were willing to accept. Regardless, producers were not exactly besieged with buyer interest. Sale prices varied from a low of $83.00 to a high of $84.00, down a dollar and two from last week. Averages were typically 60/62 lbs. One packer countered a bid on 72 lbs. and up at $95.00, several dollars higher.
Some bookings on 60/62 lbs. were seen between $89.00 and $91.00 c&f depending on origin and terms, Wet blue sales were posted between $104.00 and $105 c&f.
Branded Steers off $1.00
Few sales were reported this week. Averages between 60 and 64 lbs. were posted at $83.00 today but early in the period, one order was booked at $84.00. Colorado’s traded, also in small quantities at $81.00 and $82.00
Butt Branded Steers $1.00 lower.
Butts traded throughout the period in an unusually large price disparity. The lowest price reported was at $93.00 with other sales matriculating at both $94.00 and $95.00 on 62/64 lbs. Today, a trade was reported at $92.00 on 60/62 lbs.
Heavy Native Steers steady to up $1.00
Prices fluctuated on natives as well. Averages mostly at 60/62 lbs., but some at 62/64 lbs. sold at $95.00, $96.00 and $97.00, albeit early in the week. Today, bookings were seen at $94.00.
Heifers down $2.00-$4.00
Volume perked up a bit this week as the supply of heifers in the slaughter mix seasonally increased. An early sale was seen at $77.00 on natives on 50/52 lbs, but subsequent business from different origins were seen at $72.00 on averages between 46 and 50 lbs. Branded heifers traded for the most part between $70.00 earlier in the period, and $68.00 by today on 48/50 lbs.
Plump Cows softly steady
Sales in this category were hard to come by. Heavy natives were heard to have sold at $65.00, and another trade at $60.00, but neither could be confirmed. Offers were scarce. Fed heavy native cows were available at $75.00 on 60/64 lbs. 50/52 lb. Brands were offered at $65.00 from a close freight point without result. A bid on 50/52 on southwestern brands at $58.00 Laredo was countered and passed at $62.00. 52/54 lb. river area brands were reported at $59.00
Holsteins softly steady
Offerings were seen as high as $75.00 on 48/50 lbs., but as the week drew to a close, business was booked at $68.00 in one case. 60/62 lbs. traded at both $71.00 and $72.00. An unconfirmed sale was heard at $70.00. Today a bid at $67.00 was countered at $69.50 and passed by the buyer.
Brands with a small native content were offered at $71.00 Laredo on 95/105 lb. averages. Natives of the same average were bid a $71.00 Laredo, countered and passed at $76.00
Fleshed sows were posted at $9.25 Laredo on heavier weights. 25/35 packer over weight kip were available at $80.50 c&f without result.
Small packers lower
Activity picked up somewhat during the week. 48/50 lb. natives sold at $55.00 Laredo. An unconfirmed sale was heard on 60/62 lbs. at $58.00 Laredo. Less than truck load lots of conventional small packers have been heard to sell as low as $40.00 to collectors fob country points.
CLIA response to USHSLA/ICHSLTA contract integrity
According to the reports from ICHSLTA and USHSLA’s some small members of Chinese companies failed to carry out signed contracts to avoid their losses caused by declining prices in the global rawhides market, CLIA said such behavior will generate the negative impact on image of the Chinese leather industry and fair competition and steady growth of market.
In order to secure the health growth of the industry and protect rights of buyers and sellers, and create good environment of business, CLIA launched an initiative to their members calling for fair trading.
The initiatives requires all the parties to fulfill the contracts based on integrity and preserve the image of the leather industry and their own brands, the huge fluctuation of hides price can be solved with negotiation between buyers and sellers.
According to CLIA’s initiative, CLIA takes the responsibility for communication between the members of CLIA and members of ICHSLTA and help them dissolve the trade dispute, saying that credit profile system in the industry will be established to record the companies involved in disputes.
China’s tanning sector posts four month gains
The CLIA recently released information that shows that the revenue of he tanning sector saw a moderate growth of 10.3% to 47.35 billion yuan, and profits improved by 0.6 percentages in the first four month of this year, but for the production of light leather it posted a slight drop of 0.75% to 172 million square meters, slowdown of leather production led a slight decline in the imports of hides and wet blue, which is thought to be normal range.
The reason behind the slowdown of light leather is the weak demand of leather products at home and abroad. iI inevitably reduces the sales of leather volume, and nothing related to the cases of pollution and smuggling that happen in the cities of Xinji and Wuji. For the same time the imports of finished leather declined 8.5% in volume 10.2% increase in value.
CLIA’s president Su Chaoying said although the slowdown of leather product exportsin the growth rate in foreign trade remains steady growth trend and more diversified, and the opportunities to invest in the foreign countries are increasing in space. Furthermore, the completed industry chain and capability of manufacturing make China still competitive in the world leather market.
Auburn leather story on Bloomberg
To see a in-depth report on Auburn Leather, one of the worlds largest producers of leather shoe laces and how they cope with higher hide/leather prices, click here.
ISA TanTec officially opens in Mississippi
In a press release today, tanning group ISA TanTec will hold an event to market the official opening of its new tannery in Mississippi on May 29. The governor of the state of Mississippi, Phil Bryant, will speak at the event.
This formal opening comes just over a year after ISA TanTec announced it would open a new tannery in the US, with Vicksburg, Mississippi, as the location.
It is a project that means an investment of more than $10 million and will create more than 350 new jobs. It comes at a time when government policies to source US-made shoes for use by the Department of Defense are driving footwear manufacturers to set up again or increase production on home soil. This change will potentially affect the manufacturing and sourcing policies of prominent ISA TanTec customers, including Wolverine, Deckers, New Balance, Keen, The North Face, Rockport, Timberland and many more.
ISA TanTec already has award-winning tanneries in China and Vietnam. It has made a name for itself as a supplier of sustainably manufactured, premium-quality leather, taking its concept of LITE (Low Impact on the Environment) leather to the global shoe industry. Founder, Thomas Schneider, has said ISA TanTec is confident that setting up a new tannery in the US will bring it good growth opportunities in the Americas.
Raw hides sales down 24%
Net sales for the period ending May 21st totaled 389,600 hides. This is 24% below last weeks 512,500. Two weeks ago, sales were 305,300. This weeks total is 6% below the previous four week average. Average sales for the month are 408,900 and for the year to date, 397,115. Destinations were:
Shipments were 292,800. This was 31% below last weeks 423,000. Two weeks ago, shipments totaled 409,300. This weeks number is 44% below the previous four week average. The year to date average is 374,870 and for May, 416,150. Outstanding sales rose to 3,060,200, compared to 2,960,600 last week and 2,894,800 two weeks ago.
Wet blue sales jump higher
Net sales of wet blue hides for the period were 89,400, up from 26,800 last week. Two weeks ago, 190,100 were reported sold. This weeks total was 36% below the previous four week average. The year to date average is 145,280 and for May 108,450. Destinations were:
Shipments for the period were 155,400. This was 23% below last weeks 190,600. Two weeks ago, wet blue shipments were 162,400. The year to date average is 144,500 and for May 176,500.
Outstanding sales as of May 21st were 753,500. This is down from last weeks 819,300 as well as two weeks ago when it was 983,100.
Combined raw and wet blue outstanding up 2%
The combined total of outstanding of sales made, but not yet shipped for the period ending May 21st totaled 3,813,700. This was up from last weeks 3,779,900 but below two weeks ago when it was 3,877,900.
Combined shipments drop 37%
Combined raw and wet blue shipments for the period were 447,900. This was 37% below last weeks 613,600. Two weeks ago, shipments totaled 571,700.
Slaughter exceeds sales/shipments
Combined raw and wet blue sales for the period were 479,000. This is down from 539,300 last week as well as two weeks ago when it was 599,400. Adding in and estimated 35,000 consumed domestically and total sales were 514,000. Slaughter for an equivalent time period was 566,000. Shipments totaled 447,900.
Therefore slaughter exceeded sales by 52,000 and shipments by 118,100 pieces.
Net sales of splits for the period were 134,600 lbs. This compares to last weeks 1,109,400 and two weeks ago when it was 1,122,200 lbs. 90,300 lbs. went to Korea but there was a cancellation from Hong Kong of 33,800 lbs.
Shipments were 1,134,100 lbs., down from last weeks 1,790,20, but up from 1,086,500 lbs. two weeks ago. Outstanding sales as of the 14th were 14,229,200 lbs. This is down from last weeks 15,288,700 lbs. as well as two weeks ago when it was weeks 15,909,600 lbs.
FRIDAY AFTERNOON FACTOR
The FACTOR is quite bearish today. As per the above sales statistics, slaughter exceeded sales and shipments for last week and we believe the situation will be similar in the week ahead. Buyer interest was comparatively low, and even the number of bids was discouraging, regardless of price. Producers typically have ample quantities to sell and more than a few for close in shipment.
TALE OF THE SCALE
We have put the scale of supply and demand decidedly to the left today. As above, we sense that there is a far greater need to sell at the moment, than there are tanners and even traders, in any rush to buy.
How was last week’s forecast?
Good. We anticipated prices to be generally lower and they were
And for the coming week?
Lower on just about all, if not every selection.
Bulls say that drums have not stopped turning and tanner inventories will need to be replenished sooner later. Hand to mouth tanner buying will eventually have to be expanded.
Bears see nothing but lower prices ahead as producer forward sold positions erode further, exacerbated by re-sales, letter of credit issues and even cancellations. They are further buoyed by the end of the “slow” season for leather sales a good 8-12 weeks away.
“It’s not over till it’s over!”
Former baseball luminary Yogi Berra once made this statement when recalling a baseball game that was won in the last part of of the last inning when it appeared that the game would be lost. It was was ultimately won.
We find this quote akin to the current hide market. We believe the downward trend that has seen declines since late March is far from over, and we would not be surprised to see steer prices to fall another 10% or so between now and late July/August. However, at some point, hides will be rationalized, as they always have been, as “being too cheap” and some of the industriese most clever members will begin to buy and reverse the trend.
The sky is not about to fall, and as leather prices become more favorable to manufacturers of finished products, and new and different styles must be generated, leather will begin to look like a “cheap” component. We don’t expect to see any kind of price recovery that will be even in close proximity to the high’s seen in 2014. Any resurgence of demand cannot be expected to be widespread or overwhelming, but ultimately, conditions will improve.
Federally Inspected Slaughter
Federally inspected slaughter including Saturday, May 30th is estimated to be 525,000. This is incrementally below last weeks 566,000. For the same period last year, FIS was 540,000. For the year to date, slaughter is 11,537,000. This is down 7.0% from a year ago when FIS was 12,399,000, or a difference of 8462,000 head.
Quotes for Success
“Though no one can go back and make a brand new start, anyone can start from now and make a brand new ending.” – Carl Bard
Prices at the Close of Trading
|SELECTION||WEIGHT||PER PC FOB||LAST WEEK||LAST YEAR|
|Heavy Texas Steers||60-62||$83.00-84.00||$85.00-86.00||$100.00-101.00|
|Heavy Texas Steers (Heavy)||70-72||$90.00-91.00||$90.00-91.00||$115.00-117.00|
|Branded Steers (Heavy)||70-72||$90.00-91.00||$90.00-91.00||$113.00-114.00|
|Colorado Steers (Heavy)||70-72||-||-||-|
|Butt Branded Steers||60-62||$92.00-94.00||$93.00-95.00||$105.00-106.00|
|Butt Branded Steers (Heavy)||70-72||$100.00-105.00 n||$100.00-105.00 n||$117.00-119.00|
|Heavy Native Steers||60-62||$94.00-96.00||$93.00-95.00||$107.00-108.00|
|Heavy Native Steers (Heavy)||70-72||$107.00-109.00 n||$107.00-109.00 n||$117.00-118.00|
|Heavy Native Heifers||48-52||$70.00-72.00||$72.00-74.00||$89.00-91.00|
|Heavy Native Cows||48-52||$60.00-63.00 n||$60.00-63.00 n||$82.00-85.00|
|Branded Cows||48-52||$57.00-62.00 n||$57.00-62.00 n||$67.00--69.00|
|Spready Dairy Cows||48-52||$68.00-72.00||$68.00-72.00||$86.00-87.00|
|Over-weight Kip||25-35||$80.00-85.00 n||$80.00-85.00 n||$108.00-112.00|
|Native Bulls||100-110||$70.00-72.00 n||$77.00-79.00 n||$90.00-96.00|