Upholstery demand continues to bring hide interest, but bids are lower than the last traded levels at this point in the week. The inability to ship product quickly is pressuring current prices lower. Footwear hide demand is relatively unchanged, with depressed interest and prices. Some Chinese tanneries are now offering resale hides at economically attractive prices, but a number of buyers remain uninterested because of their sufficient existing inventories.

US retail shoe sales figures were released by the Federal Reserve Economic Data (FRED) for November at $2.4 billion, down $55 million or 2 percent from the prior month. November sales for 2020 are down 21 percent from the prior three-year average of $3 billion. From June to November, demand and sales for footwear were flat while consumers remained wary of unnecessary spending during the pandemic. However, as normalcy in consumer lifestyle and spending behaviors return, it is reasonable to expect better sales performance in the second half of 2021.

Historically, footwear has been made two quarters before the shoe is released at retail. Leather tanners will purchase hides two months prior to the manufacturing. The shipping period for US hides has previously been between 4-6 weeks for arrival at tanneries in Asia. Currently, the lack of container availability ahead of the Chinese Lunar New Year and port congestion in the US and Asia are delaying shipments to 10-11 weeks for arrival. Because of the delay, tanners are now forced to purchase hides for May manufacturing and third quarter (Q3) sales. Past retail shoe sales data highlight Q3 as a seasonal peak. If shipping delays in Asia do not worsen and consumer spending continues to improve, demand for shoes should pick up heading into Q3 and potentially Q4. Improvement in demand for the leather goods would also push greater demand for hides, but current inventory gluts are going to need to be worked through.

Figure 1.

Today’s Trades

Packer Sales

HNS 60/62 @ $41.00 OR 0.5250
HNS 66/68 @ $41.00 OR 0.4775
HNDS 70 MAX @ $41.00
BBS 62 MIN @ $38.00 OR 0.4775
BBS 66/68 @ $38.00 OR 0.4425

Processor Sales

HNS 62/64 @ $31.50 OR 0.3900
HNS 66/68 @ $32.00 OR 0.3725
HNDS 70 MAX @ $36.00
BBS 62/64 @ $27.50 OR 0.3400
BBS 66/68 @ $27.50 OR 0.3200