Stock building lifts demand

Over the New Year, US packer and processor supply exceeded demand from tanners, particularly when major steer producers found it impossible to increase or maintain prices between Christmas and the start of 2002. Most industry observers admitted price declines were inevitable in order to shift stocks. As a result, tanners, particularly in Asia, took higher volumes prior to Christmas. However, many suppliers made up for lost ground over Christmas when prices rebounded in 2002. Branded steers led and nearly all the major selections followed. Following an increase in demand, packers were asking for higher prices towards the end of January but some resistance was experienced. In general, packers and processors were able to shift stocks and establish forward sales which had fallen during December. With no significant signs of an upturn in the leather market, many packers were waiting to see whether the improvement in sales during the first weeks of January was the start of a recovery or whether tanners were just replenishing depleted stocks. Many feel that the industry cannot get any worse and the market is likely to pick up over the next few months. Prices at the end of January held firm with dairy cows and branded cows trading up about a dollar a piece. Small packers saw some improvements and major packers anticipated Texas steers being offered at $57, heavy native steers at $58 and branded steers at $55. Despite the increase in prices during early January, most predicted less confidence into February. Federal inspected slaughter for the three-week period up to January 12 was as follows: The average weekly number of hides sold was 690,000, up 4.5% compared with 659,000 for the corresponding weeks in 2000/2001. South Korea once again led the way taking an impressive 457,400 hides over the same three-week time span. Korean buyers took a substantial 245,000 hides alone in the week before the Christmas holiday. China took 306,700 hides of which 208,300 were taken in the run up to the holidays. Taiwan, Japan, Mexico, Thailand, Italy and Hong Kong took 136,100, 109,600, 69,800, 34,200, 26,800 and 23,700 pieces respectively. Wet-blue sales averaged 82,466 pieces over three weeks. However, 153,700 hides were purchased in the week before Christmas. Korea took 40,300, Hong Kong 34,300, Taiwan 25,700, Indonesia 16,800, Thailand 15,200 and Italy 9,900. Wet-blue splits reached 576,000 and 913,00lb at the end of December, although no significant sales were reported in early January. Hong Kong, Indonesia and Korea were reported as major buyers.