A few glimmers of hope5 March 2002
Although the Panamerican Leather Fair has closed its doors, there have been a few glimmers of optimism heard among tanners. One noted that men's and women's belt demand had picked up sharply and a boot show in Denver had been far more successful than most had anticipated. Side leather tanners, however, continued to complain of a lack of interest, regardless of price, although many think that there will be an increase of activity by the end of February. The rally in steer and small packer prices seen at the beginning of the three week period ending February 3 proved too much for tanners at the end of the first week. Small quantities of steers were traded at higher prices, although most major packers were unable to sell their total production. By the beginning of February, prices had fallen substantially on all types of branded steers. However, as lower levels became established, buying interest accelerated and the market rallied. Heavy Texas steers began the period with volume bids of around $56-56.50, although most packers held out for offers of $57 or more, but this resulted in a quantity of major packer productions being carried over to the following week. Prices started the second week at around $58 but quickly fell to $57.50 as packers saw buyer apathy, although most bidding was in the region of $55-56. By the third week, prices had fallen to $54-54.50 as packers were eager to sell before the Asian holidays. Butt branded steers did not fare as well, having to concentrate mostly on domestic tanners who were not that active. Asking prices began the period at $56 and saw a few bids at around $53-54. Although unconfirmed, bottom prices of $50 were heard in early February for immediate shipment. Heavy native steers fared better. Packer trading took place as high as $58.75. Demand appeared on a level with supply and most felt that the increase in native prices was due largely to the advance in Texas steers. Butt branded steers failed to trade at levels equal to Texas with sales in the region of $54-55. In fact, butts began the period with prices sold on a par with branded steers, which is unusual. In early February, butts still did not find the same demand as Texas but trade volume was good, with packers succumbing to bids as low as $52.50-53.00 for quicker shipments. Colorado steer trading began the period typically light with business concluded between $52-53. By week three, trading had dropped with more than one producer forced to take $48.50-49. Branded heifers traded at around $48 for the three week period. Although light trading is normal for this time of the year, supplies are slowly starting to increase. The cow sector was fairly quiet. Branded cows, which had recorded solid growth since the beginning of the year, only witnessed a slight increase in prices. Prices were steady in and around the $35 mark for both northern and southern productions of a similar weight. Diary cows started firm but supply and demand were generally equal at a low level. By the beginning of February, more than one producer of dairy cows failed to see any bids at all, regardless of the price offered. Holstein activity was also limited, mostly due to a lack of offers. By the end of January, packer fleshed Holsteins averaging between 48-52lb sold between $43.50-44.50. Small packers began the period moving fairly well but slowed in the second week. Sales were described as 'spotty' by the final week. Predictions The hide market has been operating on a roundabout basis for over six months. As prices dip, tanners rush to buy as packers are forced to sell at the best obtainable price. When volume sales take place, packers gradually push up prices with fewer sales. After two to four weeks of sales that are below production levels, packers are forced to reduce prices back down. And so the circle is likely to continue. Slaughter levels are expected to be relatively low for some time to come. The leather business also remains at a comparatively low level. Any increase in kills is not expected in the near future, but a pick up in leather business towards the end of February and into March is predicted. Exports Federal inspected slaughter for the three weeks to February 3 was as follows: total raw hide sales began the period at a large 510,200 pieces, although most traders were surprised at the pace of business. This climbed to 602,800 for the week ended January 17 and explains many packers' reluctance to accept lower prices at the beginning of the week period. The figure fell to 385,600 pieces in the week ending January 24, down 30% on the previous week. Over the three week period, raw hide sales averaged 499,533 pieces. Korea took the largest share at an average of 208,600 pieces during the three week period, China followed with 124,600, Taiwan took 52,133, Mexico 39,500, Hong Kong 26,500, Italy 22,767, Thailand 18,600 and Japan 12,100. Wet-blue splits averaged 2,535,867lb during the three week period. Korea, Mexico and Italy were reported as major buyers. Weekly raw hide exports averaged 420,233 over the three week period, while outstanding sales averaged 3,943,403, topping the 4 million mark with 4,038,100 during the middle week.