View from the US

Side-branded material was challenging to sell thanks to continuing poor footwear demand; however, the lower prices did spur some purchasing. At least heavy native steers used for the automotive sector were steady with good interest. Butts were under a bit of pressure as auto leather customers preferred natives.

Cow sellers continued to have good interest for upholstery and handbags, although they had to work a little harder to keep prices steady.

Exports

October weekly rawhide sales averaged 415,700, down just 1% from September, but 19% from October 2022. Weekly rawhide shipments in October averaged 442,200. This is 4% higher than the September average and 10% more than the same month last year.

Wet-blue sales averaged 133,360 in October, down by 29% from September and 20% from October 2022. October’s wet-blue shipments averaged 132,900 in October. This is 4% higher than in September but 10% lower than in October 2022.

WASDE ups 2024 red meat production forecast

The World Agricultural Supply and Demand Estimates November forecast for 2023 red meat and poultry production was lowered from the previous month. Beef production was lowered with reduced steer and heifer slaughter more than offsetting higher expected cow slaughter and higher average dressed weights in the fourth quarter.

For 2024, the beef production forecast is raised. Higher expected steer and heifer placements in the latter part of 2023 and the first part of 2024 will lead to higher marketings of fed cattle, particularly in the first half of 2024. In addition, cow and bull slaughter is raised from last month.

Beef imports for 2023 are raised on recent trade data and stronger expected imports from Australia in the fourth quarter. For 2024, beef imports are raised based on higher expected imports from Australia due to tight US beef supplies. Exports for 2023 are raised slightly based on reported data for the third quarter. Beef export forecasts for 2024 are unchanged.

Cattle price forecasts for 2023 and 2024 are unchanged although weaker prices in the first half of 2024 are offset by higher prices later in the year.

US cattle on feed up 2%

Cattle and calves on feed for the slaughter market in the US for feedlots with capacity of 1,000 or more head totalled 11.9 million head on 1 November 2023. The inventory was 2% above 1 November 2022.

Placements in feedlots during October totalled 2.16 million head, 4% above 2022. Net placements were 2.11 million head. During October, placements of cattle and calves weighing less than 600lb were 550,000 head, 600–699lb were 470,000 head, 700– 799lb were 465,000 head, 800–899lb were 394,000 head, 900–999lb were 205,000 head, and 1,000lb and greater were 80,000 head.

Marketings of fed cattle during October totalled 1.76 million head, 3% below 2022. Other disappearance totalled 55,000 head during October, 2% above 2022.

Hide market

Throughout much of the autumn, the US hide market was mainly steady. By the start of November, as one seller said, there were cracks developing. Softening prices were due to poor footwear demand as sources in China reported that shoe upper leather orders were very bad. Footwear orders overall remain poor for China’s domestic market as well as for export.

Chinese tannery purchasing was therefore being driven by low prices, not better orders. On the other hand, upholstery and car interior leather demand was better, hence the good interest for cow hides.

Without a doubt, hide prices are comparatively a bargain. Only in the throes of the pandemic in 2020 were they lower. Looking at the price charts for the main steer selections, current levels are about where they were at the same point in 2020.

With so many plates spinning in the air concerning global economic and political developments, nothing can be for certain. Most importantly, no factors were present to justify hide prices rising, no matter what was happening with US cattle slaughter.

The overall feeling was that sellers should be happy with current market levels being stubbornly steady. This is particularly true as these levels will likely persist into 2024 and possibly until after the Lunar New Year holiday.

Throughout the final months of 2023, packers often struggled to conclude sales. They tried to hold prices unchanged, but customers were bidding aggressively lower. Of course, when the market begins to soften, rumours abound regarding belowmarket sales. This dovetailed with assertions by packers that customers prefer to buy directly rather than from other sellers. While that’s probably true, it was also probably true that those sales were discounted deals.

Automotive leather demand was unscathed by the US autoworkers strike and prices remained quite steady. Ultimately, suppliers did not have to make any adjustments to their purchasing due to the strike and continued to see “normal” volumes from customers.

Sadly, one of the reasons that the strike did not have a big impact on auto leather is because the removal of leather from car interiors is a reality. Sources say that some programmes that have historically purchased 3,000-plus hides per week have been reduced to fewer than 100.

The market’s view that leather is less environmentally friendly than the alternatives is a fallacy that our industry so far has not done enough to quash.

Still, many times, auto leather has been one of the drivers that helps keep the hide market stable – as it was in recent months. As one producer stated, at least the automotive leather sector has been OK because the footwear leather market is not.

Increase in demand?

For things to improve overall, the shoe tanners in China need to ramp up purchasing. This doesn’t seem possible in the near term as sources say that many shoe tanners are working at 60% capacity.

Unfortunately, it will likely be some time before a general increase in demand can be expected. China’s economic struggles are well known and consumer purchasing in other regions is also lagging. Additionally, Chinese customers report that the lime split market has dropped, which is also not helping the situation.

It’s not just tanners who are pushing for lower hide prices either. Sources say that gelatine and collagen customers are also holding out for lower levels thanks to too many hides going to that market, which is also seeing low demand.

The overall sentiment among sources has turned rather negative.