A good time to buy

With the exception of dairy cows and native bulls, prices across all US selections in mid-May were between US$1 to $5 less per piece than they were a year ago. If you also consider that a year ago, the economic predictions were worse than they are now and the war in Iraq and SARS was upon us. The biggest falls have been seen with heavy native steers which are around $3.50 lower than the same time last year, heavy native heifers are as much as $5.50 lower and branded heifers are $6 lower than in mid-May 2003. All this has happened while the overall slaughter level at US packers has fallen with current USDA estimates suggesting an 8% drop in Federal Inspected Slaughter compared with the same time last year. While US hide prices are an attractive proposition, many finished product manufacturers from North America have been reporting positive annual and first quarter results. Adidas-Solomon Group sales increased 3% for the first quarter of this year when removing currency differentials. Sales declined 2.8% in euro terms. US footwear retailer Footlocker saw sales grow by 5.1% against the same time last year. The Payless Shoe Source, the largest US footwear retailer, reported sales at their outlets rose by 4.7% which is their biggest increase in three years. Dairy cow prices have risen in recent weeks as there has been a lower than normal slaughter for various cow types. Packers report a 20-50% drop in the cow kill for this time of year. Reasons given are the high price of milk and good pasture lowering the overall costs of feeding the animals. There has been a slight increase in the lowish slaughter rate over the past few weeks and prices have risen slightly. Higher raw material prices in Europe and South America have also aided the US packers hand. However, now would seem like a very good time for tanners to buy if they can afford to stock hides until their market situation improves and they have the facilities to store large quantities of raw or tanned US raw material. US Federally Inspected Slaughter for the four-week period ending May 13 averaged 609,750 pieces per week compared with 639,500 during the same time last year, a fall of 4.7%. China was once again the major export destination of US raw hides taking 962,400 over the same period. Other major buyers were South Korea (588,500), Hong Kong (197,000), Taiwan (158,700), Mexico (94,100), Japan (92,900), Italy (70,300), Thailand (67,600) and Canada (48,300). Italy and Hong Kong also took 111,300 and 45,300 calf and kip skins respectively while India took 31,500 calfskin. Wet-blue exports averaged 121,825 per week with Italy, China, South Korea and Taiwan making up the majority of destinations. Wet-blue splits sales varied throughout the four-week period with a negative figure shown in the week ending April 25 following an adjustment and correction.