View from the US

The price of heavy Texas steers remained weak. Seasonal weights were selling at $22.00 with limited sales and discounts available for larger volume deals. Colorados, on the other hand, dropped by a couple of dollars again to sell for $19.00 to $20.00 for 64/66lb selections.

Continuing poor footwear demand weighed on side-branded material, but for some footwear customers, activity and purchasing were picking up. Heavy native steers and butt-branded steers were facing their own challenges as the automotive sector was not restarting as quickly – or at the same volumes – as expected.

Cow sellers continued to have good interest for upholstery and handbags and prices remained steady. As the outlook for upholstery began to moderate a bit, demand from handbag customers picked up a little to compensate.

Exports

Weekly rawhide sales averaged 420,580 in January. This is 18% higher than the December average and 2% higher than January 2023. Raw hide shipments averaged 346,560 in January, which is 13% lower than the December average and 14% below the January 2023 average.

In January, wet-blue sales averaged 113,360. This is 18% lower than the December average but 9% higher than in January 2023. Weekly wet-blue shipments averaged 122,620 in January. This is 22% lower than the December average but 22% higher than the January 2023 average.

WASDE ups 2024 red meat production forecast

The World Agricultural Supply and Demand Estimates February forecast for 2024 red meat and poultry production was raised from the previous month. Slaughter is lowered for the first half, reflecting a slower pace of cattle slaughter. For the second half, steer and heifer slaughter is raised as the USDA’s January Cattle report implied a smaller decline in cattle outside feedlots than previously expected and to the extent these cattle are placed on feed in the first half, they will likely be marketed and slaughtered in the second half. Carcass weights for the second half are also raised.

Beef imports for 2024 are raised for the year on firm demand for imported beef and larger supplies of beef, largely in Oceania. The beef export forecast is unchanged. For 2024, cattle prices are raised on expected strength in first-half demand for fed cattle in the face of tightening feedlot numbers.

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 January 2024. The inventory was 2% above 1 January 2023. The inventory included 7.20 million steers and steer calves, up 2% from the previous year. This group accounted for 60% of the total inventory. Heifers and heifer calves accounted for 4.74 million head, up 2% from 2023.

Placements in feedlots during December totalled 1.70 million head, 4% below 2022. Net placements were 1.64 million head. During December, placements of cattle and calves weighing less than 600lb were 440,000 head, 600–699lb were 410,000 head, 700–799lb were 380,000 head, 800–899lb were 279,000 head, 900–999lb were 110,000 head, and 1,000lb and greater were 85,000 head.

Marketings of fed cattle during December totalled 1.73 million head, 1% below 2022. Other disappearance totalled 60,000 head during December, 11% above 2022.

Hide market

The beginning of 2024 was no fresh start for the hide market. The hide industry entered the new year with a full plate of concerns. Low demand – especially for footwear – was the main problem but there were also other matters weighing on the market.

Hide weights were an issue from the fourth quarter into 2024. Packers were selling hides as being 64/66lb or 66/68lb, but what shipped was often significantly heavier. This changes freight costs and the number of hides in a container, which might be OK for packers but not so much for other sellers. Another weightrelated point was the lack of interest in jumbo selections, so it follows that the premiums previously associated with higher weights disappeared.

Cows continued to be the bright spot in the market in early 2024. Sellers were well positioned and able to keep selling at steady prices thanks to good demand, especially for upholstery.

2023 was no picnic for hide sellers either. Slaughter last year was 32.243 million. Combined shipments for 2023 were 28.282 million. That leaves a glaring gap of 3.960 million hides that the added domestic consumption estimate cannot come close to erasing.

Another interesting item from 2023 concerns splits. The volume of splits exported in 2023 was down by 74% from the 2022 total. It’s not news that the global split market was quite poor last year and these figures support that.

Turning to accumulated exports, it turns out that China bought about one million more raw hides in 2023 than it did in 2022. At the same time, the rest of Asia imported about two million fewer raw hides in 2023. Among the wet-blue numbers, Brazil imported almost five times more in 2023 than it did the previous year.

In the end, the US produced about one million fewer hides in 2023 and exported over three million fewer than the previous year.

Until the end of 2023, automotive leather demand was in OK shape; however, the new year started slower than anticipated. Sources said that Mexican facilities were working at 55–65% and purchasing slowed. This put pressure on natives and butts, both of which were able to remain relatively steady due to the seasonal lack of supply.

Returning to footwear, wet-blue buyers were taking the stock they committed to purchasing, and some said this indicated a potential improvement in orders for some international brands.

For raw hides, however, much depends on domestic Chinese demand and that has not improved. Not surprisingly, real improvement was not being expected until the second half of 2024.

Even when orders start to pick up, the market will be tamped down by global uncertainty. Among the footwear brands, some have done well clearing their pandemic-era backlog of inventory and business is coming back to normal. Meanwhile, some others are still chipping away at their backlogs.

As the footwear earnings reports came out, brands were still not painting a very positive outlook for 2024. Sources say this was not so much because of business, but because of the many global uncertainties. Inflation, the Red Sea conflict disrupting shipping, elections in many countries and whatever else may crop up during the year could easily derail the footwear market’s improvement.

Footwear sources say that on the tannery side, December and January saw a nice pick-up in business. That said, the hide business will heavily depend on the business of large Chinese tanners. They all have sizeable inventories, so even when orders pick up, it will take some time to work through the stocks. Consequently, they won’t be pressed to purchase if prices are not to their liking.