View from the US

Colorados, on the other hand, saw prices fluctuate but remained generally steady, with 62/64lb selections selling at $25.00–26.00 in mid- October. Despite the ongoing autoworkers’ union strike against the ‘Big Three’ US automakers, in mid-October it had yet to have a palpable effect on automotive leather demand.

Selections used for the automotive sector maintained generally steady prices, although levels were about $1.00 lower than the highs of late summer. Heavy native steers sold between $35.00 and $36.00 for seasonal weights.

Cow sellers reported good interest through the autumn. In fact, prices ticked upward around the Shanghai fair at the end of August and remained steady through mid-October.

Exports across the sector saw highs and lows

Rawhide sales in September averaged 421,325, which is 31% higher than the August average but slightly lower – less than 1% – than the September 2022 average. For Q3, sales averaged 410,154. This is 5.5% lower than the Q2 average but 11% higher than the same quarter last year.

Shipments of raw hides averaged 424,675 in September, up by 12% over the August average but 10% lower than in the same month of 2022. In Q3, weekly shipments averaged 425,954, which is 6% higher than in Q2 and 2% higher than in Q3 last year.

Wet-blue sales averaged 188,875 in September, dramatically higher than in August. The increase was 175%, and compared with September 2022 they were 148% higher. For Q3, the average was 129,192, up by 2% over Q2 and by 30% over Q3 in 2022.

Shipments of wet-blues in September averaged 127,925. This is 19% higher than in August but 17% lower than in September 2022. For Q3, shipments averaged 119,292, 4% higher than in Q2 but 16% lower than in Q3 last year.

Weaker demand, lower cattle prices forecast

The October World Agricultural Supply and Demand Estimates forecast for 2023 red meat and poultry production was lowered from September, as higher beef and pork production is more than offset by lower broiler and turkey. Beef production is raised on higher cow and bull slaughter in the second half of the year, which more than offsets lowered third-quarter steer and heifer slaughter. The increase in total slaughter is partially offset by lower-dressed weights.

The beef import forecasts for 2023 and 2024 are raised on continued strength in demand and availability of supplies in Oceania. Beef exports are lowered for 2023 and 2024 on increased competition.

Cattle price forecasts for 2023 are lowered from last month, reflecting September and early-October prices and weaker expected demand for cattle during the fourth quarter of the year. Cattle prices for 2024 are also lowered from last month, as larger supplies of cattle in feedlots are expected to put downward pressure on fed cattle prices.

US cattle on feed down

Cattle and calves on feed for the slaughter market in the US for feedlots with capacity of 1,000 or more head totalled 11.1 million head on 1 September 2023. The inventory was 2% below 1 September 2022.

Placements in feedlots during August totalled 2.0 million head, 5% below 2022. Net placements were 1.95 million head. During August, placements of cattle and calves weighing less than 600lb were 420,000 head, 600–699lb were 305,000 head, 700– 799lb were 455,000 head, 800–899lb were 488,000 head, 900–999lb were 245,000 head, and 1,000lb and greater were 90,000 head.

Marketings of fed cattle during August totalled 1.88 million head, 6% below 2022. Other disappearance totalled 55,000 head during August, 4% above 2022.

Hide market had a close eye on the fairs to see if they would deliver

The start of the autumn leather fair season was much anticipated, but the first major shows failed to deliver major changes to the US hide market. The Shanghai show was well attended as was Lineapelle. Both were counted as successes in terms of the attendance and exhibitor numbers; however, for raw material, they did nothing to fuel sellers’ hopes of market improvement.

Not that either fair could have done much. Global footwear demand is far too low and no magical bump could come from the fairs. Instead, Lineapelle in mid-September confirmed the wariness and concern of the hide market.

Essentially nothing changed for weeks as branded material became harder to sell at steady prices. Cow sellers, who got a price bump from the Shanghai show, watched levels stagnate as sales continued to be steady for at least six weeks with no prospect of moving higher.

As in other hide-producing regions of the globe, quality US material had a market while lesser selections struggled to find sales. In fact, in the US, some sources have started to consider whether alternative uses could create a decent market for lower-grade materials.

Economic issues persist though many maintain being well sold

Remarkably, throughout the autumn, producers continued to maintain that they were well sold. As most others said, higher prices and strong positions were not likely given the mess of economic issues that continue to trouble the US and other countries. In the US, the United Auto Workers’ strike against the Big Three Detroit car manufacturers had not yet dented the auto leather market.

It’s never easy to suss out why hide customers are buying, but when it comes to steer hides for footwear, a great influx of orders was not the reason Chinese customers kept purchasing. Sources in China report that shoe upper leather orders are very bad and that footwear orders overall remain poor for the domestic market as well as for export. The country’s footwear exports have been declining in the past several months. Consequently, Chinese tannery purchasing is being driven by low US hide prices, not better orders. Compared with footwear orders, upholstery and car interior leather demand is better.

In the US, market analysis firm Circana forecasted a glum holiday season for the sector. Footwear may not get a boost from holiday sales, but even if there is one, it wouldn’t be enough to offset the overall decline for the quarter. In addition, 2024 footwear dollar and unit sales are expected to be flat.

In mid-October, steer prices were still under pressure while the cow market was stubbornly steady. If autumn sales were truly being driven by price and not need, the upcoming season of selling winter hides could turn out to be problematic if there is no increase in demand.