US hide prices stabilise at last!

Despite claims by tanners, and to some extent traders, that heavy Texas steers were weaker, this was not the case when it came to actual business that was concluded. Most sales were seen between $27-$28, which was the same as in the previous month. Buyer’s attempts to shave a dollar or two from these prices were in vain. By the same token, Asian tanners who were willing to pay $35 (and they were few and with extended terms) were successful as were some, in volume, who had some success at $33 c&f. Large volumes of interest were seen at $30 and up to $31.00, which were passed by sellers.
Prices of branded steers covered a wide spectrum based on shipping time. On the low side, trades were reported down to $23 but elsewhere business was done at $24-$25 regardless of average. On a c&f basis, sales were recorded at $28-$29. Colorado steers traded at $20-$21 in line with a week ago. This selection had been under pressure several weeks ago but managed to get cleaned up by selling as low as $19 in the interim.
Prices of butt branded steers moved mostly between a low of $24 and up to a high of $26. Efforts to secure business at $33 c&f were futile with reported sales taking place at $31 and a high of $32 c&f.
Heavy native steer prices sagged since our last report due to a seasonal increase in supply. This caused prices to dip below Texas and butts at the end of March. However, by mid April, any excess production had been sold and prices firmed up to $29 for most origins. Business on a c&f basis was at $34-$35.
Prices of native and branded heifers were pretty much in line with a week ago. Native sales were heard between $21-$23, depending on origin. Not many sales of branded heifers were posted but what did see the light of day were at $20.
Cow prices closed the week at pretty much the same as last month. Heavy native cows were reported trading between $12 and up to $15, depending on origin but offerings were relatively scarce due to well sold producers. Branded prices varied widely depending on forward sold positions, which have been improving since early in March. The lowest prices heard were at $9 in the south but more typically sales were concluded at $12 for all but the most desirable origins.
While seller attempts to garner higher bids from tanners were not successful, prices were fully firm. Better origins sold at $22 with more ordinary productions trading at $19-$20.
Bull prices firmed since our last report between $1-$2. Natives sold at $22-$23, and branded bulls traded in and around $15-$18 depending on origin and average. Asian interest was minimal and producers were typically well forward sold.
The CLIA announced in mid April that: ‘To conform with national economic development, the Ministry of Comm-erce, Ministry of Environmental Protection and General Admin-istration of Customs jointly made an announcement on the policy adjustment of rawhides and skins processing trade, details can be seen as follows:
The importation of rawhides and skins, where the inputs are subsequently converted to leather products (shoes, bags, leather garments, etc) and re-exported: customs duty and vat free. The original scheduled expired date is extended. The importation of semi-finished leather where the inputs are subsequently converted to finished leather: customs duty and vat free. This policy has already come into force but in the time since the edict was published, it does not appear to have affected US hide prices (see page 4).
US retail prices for footwear increased a seasonally adjusted 0.2% in March and rose 1.8% compared with a year earlier, according to the Labor Department in its Consumer Price Index. Men’s footwear prices increased 0.8% from the previous month and 1.8% from March 2008. Prices for women’s footwear increased 0.3% in March, but declined 0.3% from the same period a year ago. Boys’ and girls’ footwear increased 0.5% month-to-month and 3.7% year-on-year.
Export sales of American hides, especially to China but elsewhere as well, were fairly robust through March and into April.
Seller’s forward sold positions seem to be the key factor. While we cannot be bullish and would be very surprised to see any near term price improvement, we think that in the cow sector as well as heavy native and possibly butt branded steers, most producers will be able to turn down lower bids. However, in the case of the most voluminous selections produced, heavy Texas and branded steers, we have to question how comfortably well forward packers and processors are. We think prices of these selections are vulnerable to at least incrementally lower bids.
For this reason, we think that steer prices, in general, will do well to hold to steady levels in the second half of April and could possibly go lower due to lower bids on Texas and branded steers being accepted in order to generate some business. If these two selections trade down, they will inadvertently put pressure on butts and heavy natives.
Is it darkest before the dawn? Of late, we have more evidence of things starting to look better still in the overall economy. As one pundit noticed, nearly all leading indicators either declined at a slower pace than earlier in the year, and some actually improved. This was for items ranging from housing starts to bank loans to retail sales and travel. Shopping malls are not as empty as they have been and perhaps, just because of better stock market activity in many parts of the world, consumer confidence seems to have reached its low ebb.
In the case of hides, prices have stabilised for the last six weeks or so with few exceptions. Yes, there are still many problems and still stories of inventories at producer levels that need to be shipped and tanners complaining of leather business. There are also some tanners baulking on previous purchases in some cases just made 8-10 weeks ago and now ready for shipment.
However, retail as well as manufacturing inventories, along with tanners hide inventories, have typically been cleared out as much as is possible. Even though we are entering into the slowest leather season of the year, our guess is that back to school business late this summer will be better than many anticipate. If this is right, then we can expect to see inventory replacement by retailers, back through the supply chain to hide prices, that could improve significantly at the same time and forward into the fall.