Prices of US steers rose rapidly since our last report. Gains were seen in heavy Texas, branded, butt branded and native steers that increased as much as 4% in little more than a month. Cows were not left in the dust with branded and native plump material adding 6% in most cases to early January levels. The only exceptions to the gains that exceeded historic highs were Holsteins which maintained steady levels during the period.

There were two major factors that fuelled the January rally. First there was the finalisation of negotiations between major footwear as well as furniture brands and most tanners of any size. This resulted in price increases on typical shoe upper leathers of between 10 and 15 cts/sq ft. This equates to approximately $5-$8 per hide. Increases were seen on upholstery leather as well.

Tanners complained that the higher prices were inadequate since steers, for example, have risen more than $10 per hide since the last round of price increases was established around the time of the Shanghai leather fair. Once tanners knew what they could sell their leather for, many stepped into the hide market. The situation was exacerbated by heavy trader buying in advance of their astutely perceived need of too many Asian tanners that had let their inventories run down too low.

The second important factor that created the price increases was the ability of producers of about all types of hides to continually reject bids that were not over last sales. This was possible due to very extended forward sales positions. Therefore, packers and processors who were hesitant to become even further forward sold, combined with tanners who were under-bought, created the volatile situation that created the price surge.

After a large round of business in the second half of January, prices began to level off early in February as Asian tanners began to prepare for their annual Lunar New Year holidays. This meant factory closings that run for as long as three weeks in some Chinese facilities.

In late January and the first days of February, the WSA, which is the largest semi-annual footwear show in the world, took place in Las Vegas. The organisers said that the latest edition had nearly 40,000 participants, including those from 95 foreign countries. The show boasted exhibits by 1,600 companies encompassing 6,000 brands.

Just about every retailer of any size walked the aisles meeting with vendors and looking at the latest styles offered by US and foreign manufacturers and brands. When asked about their increased leather costs, some major international footwear brands admitted that they were only able to pass part of their increased leather costs to their retail accounts and then only on the most popular styles in their stable.

When it came to other lines which were not in particularly good demand, these had to be sold at the same prices as last season, with the increased leather prices borne by the brand.

At just about the same time as the WSA show was being held, the semi-annual Las Vegas furniture market took place. Leather sofa and recliner sellers reporting good retailer reception to their new styles and offerings. There are many exceptions but, regardless of price pressure on the part of upholstery tanners to manufacturers, wholesale prices are generally holding steady.

At both venues, it was apparent that the use of leather in footwear, accessories, and furniture was as popular and as much in fashion as ever. Showrooms at the furniture show were filled with leather and retailers around the country reported excellent business in ladies’ boots as well as what were once termed hiking or outdoor footwear that have now become part of every day dress for a large percentage of men. All of these fashions use a great deal of leather which rationalises why raw hide and leather prices have reached the levels now being paid.

Speaking of good business and higher prices, Heavy Texas steers that had advanced from $74 as the year began, shot up to $77 and even $77.50 by the last week of January. As has been the case for some time now, the unusual phenomenon of Texas, butt branded, and branded steers all trading at about the same price continued. Butt branded, branded and Colorado steers also moved from $74 to $77 and slightly beyond.

On a c&f delivered Asia basis, sales took place at a peak of $82.50-$83.00 during the first week of February but, by mid month, some sales were recorded at $81.00-$81.50. Throughout the period, heavy native steers moved from $75 to $78, maintaining a level of a dollar more than their branded brethren.

In the cow sector, brands in the west and southwestern regions went from $48.50 up to $52 with prices in the northern area reaching as high as $55. Holsteins, however, as noted above, failed to come to the party.

Prices that had been in and around $60 in the New Year, dropped to $57-58.50 for good fleshed packer and northern processor material stayed the same during the period As we go to press in late February, although prices are ‘officially’ steady on nearly all selections, tanners are seeing more aggressive sales efforts by packers as well as traders. There is not anything like desperation however. And there are few if any discounts available except where sellers, for varying reasons, are in need of making sales for close of shipment or want to build short positions.

By the same token, because tanners have been on the sidelines for quite a few weeks, the majority of the trade here believes that there will be a resurgence of buying by tanners in China, Korea and Taiwan that will eliminate any declines that may occur between now and early March.

Not very many here will admit that the top of the latest trading range has passed nor do they anticipate lower prices. We have to disagree, and think that prices have a better than even chance to trade lower before the APLF in late March.