Oklahoma Farm Report masthead graphic with wheat on the left and cattle on the right.
Howdy Neighbors!
Ron Hays, Director of Farm and Ranch Programming, Radio Oklahoma Ag Network  |  2401 Exchange Ave, Suite F, Oklahoma City, Ok 73108  |  (405) 601-9211


Agricultural News

Weak Hide Market Impacting Cattle Prices as Beef By-Product Values Continue Down 18-Month Slide

Mon, 29 Jul 2019 12:14:52 CDT

Weak Hide Market Impacting Cattle Prices as Beef By-Product Values Continue Down 18-Month Slide Mondays, Dr. Derrell Peel, Oklahoma State University Extension Livestock Marketing Specialist, offers his economic analysis of the beef cattle industry. This analysis is a part of the weekly series known as the "Cow Calf Corner" published electronically by Dr. Peel and Dr. Glenn Selk. Today, Dr. Peel explores how weak hide values are impacting cattle prices.

"On average, beef by-product values represent about 10 percent of fed cattle prices. By-product values have been eroding sharply the past 18 months with weekly values declining from about $10.70/cwt. in early 2018 to about $9.00/cwt. by the end of the year. By-products represented 8.2 percent of fed cattle prices in 2018 at an average value of $9.60/cwt. on a live-weight basis. The latest weekly by-products value was $8.88/cwt for the week of July 26, 2019. For the first 29 weeks of 2019, by-products have averaged $8.78/cwt. or 7.2 percent of fed cattle prices.

"Beef by-product values (or drop credit) include values for hides as well as a host of other edible and inedible products. Edible by-products are referred to as (edible) offals or variety meats and include organ meats and other beef products. Aside from hides, the most important beef by-products in terms of value include tongue, liver, tripe, heart, cheek meat, edible tallow, and meat scraps along with inedible tallow.   So far in 2019, these items have had an average value of $4.52/cwt. of fed cattle, up from $4.30/cwt. average value in 2018. While tongue and liver values are somewhat lower compared to recent years, overall, values for these products are holding with strength in tripe, inedible tallow and meat scrap values and mostly steady values for cheek meat and edible tallow. These products are accounting for a growing share of total by-product value due to declining hide values relative to the values of these products. Thus far in 2019, these products represent 48.2 percent of total by-product value compared to an average of 43.3 percent in 2018 and 37.4 percent from 2013-2017.

"Additionally, a host of minor by-products add another $1.43/cwt. to by-product values. These include numerous products that are used for pet food or rendering, including trachea, lungs, and inedible livers and hearts among others.

"Hides make up the single largest component of by-product values but a weak global hide market has sharply eroded hide and, thus, total by-product values. In the period 2013-2017, hide values (butt-branded, steer) averaged $74.36/piece (animal) and represented 52.3 percent of total by-product value. In 2018, hides represented 45.6 percent of by-product value with an average value of $47.93/piece. In the first half of 2019, hides have averaged $34.46/piece and accounted for 36.6 percent of total by-product values. The June monthly average hide value was $27.60/piece. The global hide market continues to weaken.

"A variety of economic factors all contribute to the global weakness in hide values. Recent information published in Australia spell out some of the factors affecting hide values (https://www.beefcentral.com/trade/hides-market-spirals-to-unprecedented-depths/). Hide supplies are larger as a result of increased cattle numbers and slaughter, especially in Brazil and the U.S. Some hides are being salted and stockpiled which may limit value improvement going forward.

"China is the major global buyer of hides and demand in China is hampered by tariffs and trade disruptions and by stronger environmental regulations impacting small tanneries. Hide values are so low that more hides are being rendered in some markets and some hides are not worth marketing in other markets. In Australia, for example some hides are being exported for a loss simply because the cost of environmental regulations to dispose of the hides is a greater loss.   Other factors affecting hide values are exchange rates and less demand for leather in luxury cars and footwear, which are using more synthetic materials.

"Beef by-product values, especially hide values, are often considered a bit of a bellwether of global economic conditions. As such, by-product values bear watching in the coming months. In the meantime, current U.S. beef by-products values are reducing fed cattle values by over $110/head compared to peak by-product values just five years ago."



WebReadyTM Powered by WireReady® NSI


Top Agricultural News

  • Oklahoma Grain Elevator Cash Bids as of 2:00 p.m. Friday, August 23, 2019  Fri, 23 Aug 2019 16:57:11 CDT
  • Oklahoma Grain Elevator Cash Bids as of 2:00 p.m. Friday, August 23, 2019  Fri, 23 Aug 2019 16:56:21 CDT
  • USDA Cattle on Feed Report Proves Friendlier Than Expected with Placements 2% Under Last Year  Fri, 23 Aug 2019 15:14:29 CDT
  • Friday Market Wrap-Up with Justin Lewis  Fri, 23 Aug 2019 14:08:57 CDT
  • Friday Afternoon Market Wrap-Up with Carson Horn  Fri, 23 Aug 2019 14:07:51 CDT
  • American Soybean Association Laments Newly Announced Escalation of Chinese Tariff Situation  Fri, 23 Aug 2019 13:10:45 CDT
  • National Cattlemen's Beef Association Addresses Packing Plant Fire, Details Recovery Efforts Underway  Fri, 23 Aug 2019 12:54:18 CDT
  • Corn Farmers Appreciative of USDA's Revised Methodology for MFP Payment Calculations  Fri, 23 Aug 2019 11:01:20 CDT

  • More Headlines...


    Ron salutes our daily email sponsors!

    Oklahoma Ag Credit Oklahoma Farm Bureau National Livestock Credit P&K Equipment Tulsa Farm Show AFR Insurance Stillwater Milling KIS FUTURES, INC. Oklahoma Cattlemen's Association

    Search OklahomaFarmReport.com

    © 2008-2019 Oklahoma Farm Report
    Email Ron   |   Newsletter Signup   |    Current Spots   |    Program Links

    WebReady powered by WireReady® Inc.