Low prices a thing of the past?17 June 2002
Producers began the four week period ending May 26 valiantly trying to obtain increases on both heavy Texas and branded steers, but tanners resisted. By week two, major packers prevailed and managed to advance prices by as much as two dollars. Packers tried to forward prices again in week three, leading to a small increase in prices by week four. Initial offerings of $63 for heavy Texas steers met with apathy, resulting in a sizeable amount of business being conducted around $61. Asking prices continued during the four week period at around the $63 mark, but buyers remained hesitant. By week four, asking prices had risen as high as $64 but quickly succumbed to bids at $63. China was the biggest buyer during the third week as Korean price resistance seemed to limit their participation. Although not seeing the support from South Korea, branded steer business increased as well, led chiefly by Taiwan. Producers turned down orders of $58-59 but tanners and traders soon moved their bids up to $60. Trading then fell off in the branded steer category, although packers maintained that they did manage to sell good volumes and were still comfortably forward sold. Interest in heavy native steers eased at the beginning of the period. Asking prices of $68.50-69 failed to be booked but a normal volume moved between $67.50 and $68 depending on origin. Trading remained steady but quiet in week two, but slight increases were recorded by the end of the four weeks to around $68.50. Heavy native heifers began limited at around $56-56.50 and sold in limited quantity during the remainder of the period at between $56-57. Branded heifers sold fairly well as prices fell from asking levels at $51.50 and $52 to below $50. Prices firmed up towards the end of the period to $50-50.50 with the category moving in fairly good quantities. Butt branded steers were more or less steady trading at $62. By week two, levels for both butts and branded steers were the same, indicating an imminent price change in one selection or the other. As predicted, butt branded prices climbed a dollar by the end of the period, back in par with heavy Texas steers. Colorado offerings were light at the beginning of the period, but some trading took place between $57-58 on seasonal averages. By week two, trading was again limited at around $58, but the category increased in appeal due to their price comparison to branded steers. The cow segment continued to have difficulty, as tanner demand remained at low levels. And the Holstein situation continued to see low levels of interest. However, for the first time in months, producers seemed sold forward enough to be able to turn down bids that were considered unsatisfactory. Predictions Hidenet believe that the market has already seen the lows for the year for about all selections. As long as the US and world economies continue to recover, and the current fashion trends remain in place, consumer demand for leather products should reduce inventories enough in the coming retail selling seasons to keep leather demand at least at its current level. Odds are that there is a good chance that the pace of retail sales could pick up even further in late summer and autumn. This does not preclude a brief dip in prices in the coming couple of months, but such an eventuality could be viewed as a buying opportunity. Exports Total raw hide sales for the four week period ending May 16 was 654,225. However, for the week ended May 9, the USDA explained the 'the report included previously unreported sales and exports of whole cattle hides made during the 2002 marketing year to Canadian buyers who ultimately exported the US hides to other countries overseas.' This resulted in 198,000 raw hides being included in the weekly total. As a result, many of the figures provided for that and the following week were seasonally high and were causing some concern as to the validity. South Korea bought an average 228,800 raw hides, China took 117,650, Taiwan 95,825, Mexico 34,450, Japan 23,475 and Italy took 18,800 raw hides and 20,325 calf and kip. Wet-blue sales averaged 155,775 with Hong Kong taking 48,300, Taiwan 31,175, China 27,300 and South Korea 15,825. Weekly wet-blue shipments averaged 127,250 and outstanding wet-blue sales stood at 774,850 for the four week period. Wet-blue split sales averaged 1,085,875 during the four weeks. Taiwan, Italy, South Korea, Hong Kong, Indonesia, Mexico and China were significant players. Weekly wet-blue split shipments averaged 1,607,675. Outstanding wet-blue split sales averaged 21,060,875 for the four week period. At this rate of shipment, it would take an estimated 12-13 weeks to ship the entire current backlog of splits, and this comes at a time when US tanners' production typically slows. Outstanding raw hide sales averaged 4,025,225 for the four week period.