Prices highest since BSE and FMD

The pace of activity towards the beginning of February was relatively slow. Producers of heavy Texas, branded, butt and Colorado steers reported a wide disparity of prices, much depending on shipping requirements, the day of the transaction and the producer. By the following week, the market had started to firm and many packers were surprised by the strength and resultant sharp advances that occurred in most selections. And then hide prices exploded. The surge in steer prices hadn't been seen since the buying panic that took place nearly a year ago due to the foot and mouth and BSE epidemics in Europe. Even then, the velocity of the rise in prices was much less. Led by Texas, just about every selection was carried along by the rising tide. Prices continued to rise into the beginning of March, with just about every selection priced higher than the previous week. At the beginning of the four weeks ending March 3, Texas steers witnessed bids in the region of $54.50-55.50. By week two, major producers were already talking about how much they would raise prices the following week, with one boasting a small volume $58.50 sale. By week three, prices soared to $62.50-63.00, up 9% in only four trading days. Interest remained solid into the final week, with most sales going to Korean tanners. Heavy native steers enjoyed a similar fate. Unconfirmed prices as high as $59-60 rose even further to $64 by the beginning of March. When packers raised prices on branded steers to $56 at the beginning of February, interest dried up. Prices then jumped to $58 as a number of tanners in Taiwan were eager to replenish inventories regardless of prices. By early March, prices had climbed past $62, influenced by the increase in Texas prices. Butt branded steer prices were erratic in early February with most packers settling for prices around $54. It is unusual when butt prices fall below Texas, but this has been the case for some time. Similarly, the abnormal disparity of heavy native steers to Texas continued, but this is expected to correct itself in the near future. In early May, heavy natives moved in small quantities between $44-46 depending on average and origin. Colorados managed to obtain $1 increases by week two and by the third week, Colorados advanced sharply to $56-56.50 as more in the trade realised the price discrepancy between this selection and branded steers. By early March, Colorados, although still disproportionately priced to branded steers, sold $2 higher. Predictions Leather business appears to be improving, and in a few isolated cases, some price gains are being seen. Korea should be adequately stocked, at least for a while, after the pace of buying seen in late February. There is also the China question. Will they enter the market in volume in the near future? No-one knows, but sources predict that raw stock inventories will have to be used up sooner rather than later and replenishment will have to take place regardless of leather prices. But the end is not yet in sight, and sources wonder whether the strength in prices can last until the Hong Kong fair. Exports Raw hide sales for the four weeks ending Sunday 3rd March totalled an average 422,875 per week. The period began with a 23% increase in raw hide sales from the previous week to 511,300 pieces with two unusual buyers: Türkiye with 11,700 pieces and Vietnam with 2,100. Lunar New Year celebrations in Asia meant that export figures were down in several countries and, therefore, did not reflect normal purchasing behaviour. China imported on average 58,975 raw hides during the four week period, although this figure fell as low as 14,800 raw hides during the peak of the Chinese New Year celebrations. On average, over the four week period, South Korea was again the most active buyer with 217,175 pieces. Mexico bought 39,700 pieces with Taiwan, Thailand, Hong Kong and Italy also buyers. Given the sudden surge in prices witnessed during the last week of February, sources were surprised that export figures were not any higher. Outstanding raw hides sales totalled 3,985,050 over the four week period, beginning at 4,056,500, then falling off for two weeks and climbing again to end the period at 4,016,300. Sources have also noted the number of outstanding raw hide sales to China. At this time last year, the figure stood at 354,100. Now they are at 649,800. One other country that now shows a large increase between 2001 and 2002 is Mexico. Last year, the outstanding raw hide figure was 179,200 and at the beginning of March, it was 294,500. Raw hide exports averaged 432,900 pieces. Wet-blue split sales averaged 1,094,800lb, peaking at 2,237,300lb during the first week. South Korea imported an average 888,733lb during the first three weeks, followed by Hong Kong with 211,400lb. Mexico, China, Taiwan and Italy were also buyers.