HIDE MARKET UPDATE
At this point, our buyers still have ample inventory of tanned deer hides from last year. As a result of the large inventory carry over from last year, we anticipate prices to be a couple of dollars less this year. Tanneries find it hard to justify paying $11.00 for a deer hide with a hole in it when they can purchase a good calf hide for $5.00. This is not good news but it will give processors time to review processing fees and adjust them if necessary.
The Shanghai Leather Show is over with fewer attendees than last year and it is back to business as usual. As far as pricing is concerned, it was a “non-event”. Synthetic leather, lack of demand for finished goods, ample supply of raw material and the Chinese economy have held raw hideprices in a narrow trading range. We have been pleasantly surprised by the demand for raw beef hides from Mexico this summer. Shipments to Mexico have replaced some of our Chinese business. Mexico has a stable shoe leather market and their auto industry has experienced strong growth. The only near term challenge with the Mexican market is the weak peso. On a global basis, especially South America, there is an ample supply of beef hides at very reasonable prices for tanneries to choose from. Our market has been in a sideways trading pattern all Summer and we anticipate this pattern to continue into the Fall season.
May 8 2017
NOTE: We have just shipped our last load of deer out of the warehouse and will no longer be excepting deer until next Fall. Thank You for a wonderful season!
Last Week we witnessed the largest one week drop in large packer beef hide prices in modern history. Bids for large packer steers dropped three to five dollars. Weekly sales were up as large packer slaughter houses began to sell their existing hide inventory. There are several reasons for the decline.
- Demand for leather has slowed while man made leather continues to gain market share.
- Many tanneries in China are being forced to shut down or close to upgrade as the China EPA equivalent imposes the new Chinese regulations on them.
- Global shipping rates have increased.
The market currently has a bearish tone to it and we see more weakness for the short term.
MAY 23 2017
BEEF: This letter came to us via Stephen Sothman, President of the U.S. HIde, Skin, and leather Association regarding new rugulations put upon hide shipments to Mexico as of this week.
"Dear USHSLA Regular Members,
On Monday, SAGARPA (The Secretariat of Agriculture, Livestock, Rural Development, Fisheries and Food, is a unit from the Federal Executive Branch of the Government of Mexico)... in Mexico City released a new HRZ regulatory document for imported hides and skins. There are two points of concern we’ve already noted: the fumigation requirement has not been removed (despite New World Screw Worm being eradicated from the US), and there seems to be a new requirement concerning manure on hides. Based on the HRZ, if hides contain any manure, the load must be returned or destroyed.
I’ve received at least one report of containers being held at the border due to the manure issue.
I’ve alerted USDA APHIS in Mexico City and DC about the issue and have asked them to move urgently to address it with SAGARPA as soon as possible. As soon as I receive more information I will forward it to you."
The Mexican issues outlined above along with the new "Chinese EPA equavalent" regulations, have moved this market down 3 to 5 dollars. To the best of our knowledge there are no hides entering Mexico. This is creating a backlog of raw hides. Mexico is one of our primary outlets for raw hide material which creats a substantial problem. In conclusion, the market seems to be in a holding pattern until the Mexican border issues are resolved.
Contact us for more information.