Prices dip with lower demand

Lineapelle and a fall in US cattle slaughter have done little to excite the market as prices on most selections fell during October. Hide suppliers were hoping that the largest industry fair in Europe would bring about higher demand, but most European and Latin American tanners have been willing and able to stay out of the market in recent weeks. However, reasonable sales were made on the higher graded selections. Market analysts suggest that lower margins on finished leather prices are preventing leather makers from offering higher prices on raw materials. IBP, part of the Tyson Foods Group, closed seven of their ten plants in early November for one day following lower seasonal demand for beef. Additionally, a higher number of cows were slaughtered in October following a US industry buy-out programme to cull cow herds. Cow slaughter was up by 5% and represented 20% of the total kill in October. Better news was reported at the end of October as the USDA announced that September beef production increased by 5%, setting a monthly record. Total production was 4.01 billion pounds (lb). However, the average live weight was down 30lb to 1,227lb per animal. Traders believe this is further evidence that overall hide thicknesses are reducing. US Federal Inspected Slaughter for the four-week period ending November 2 averaged 634,750 head. The average a year ago was approximately 10% higher at 706,250. Despite the drop in hides available, prices across most selections remained depressed with low demand from tanners. Packers asked for firm prices on heavy Texas and branded steers but sold few hides at the end of October. China has now established itself as the leading buyer of US raw hides and purchased a total of 657,600 hides over four weeks. When combined with the total hides shipped to Hong Kong and Taiwan, the Greater China region dominated US raw hide buying. South Korea is now the second most frequent buyer of American rawstock taking 411,400 pieces. Other significant players were Mexico (158,200), Taiwan (137,700), Japan (118,100), Hong Kong (94,400), Italy (68,200), Thailand (34,800), the Netherlands (15,400) and Vietnam (12,900) over a four-week period ending November 2. Spain, Colombia, Germany, Indonesia and Canada also took smaller yet significant quantities of raw hides. Although Italy was only the seventh largest buyer of hides, they did also take an additional 50,000 calf and kip skins over a two-week slot. Wet-blue sales averaged 90,350 pieces over the same period with 125,900 pieces sold at the beginning of this month. The major buyers included Hong Kong, South Korea, Italy, Mexico and China. All took large quantities. Cancelled orders from Hong Kong and Italy for wet-blue splits saw low levels exported during the week ending October 13. Only 253,000lb were sold after the adjustments were made. Much higher split sales were observed in the following three weeks with 3,131,200lb sold in the week ending October 19. Most was exported to Hong Kong (1,536,500lb) and Mexico (1,032,600lb). Spanish, Taiwanese and South Korean tanners also bought large volumes of chrome tanned splits.