Cattle Hides in High Demand

In addition to the value of a beef carcass and the beef cuts that typically are generated from the beef carcass, there is a value of other parts of the carcass that are termed “drop credit.” This includes the value of the hide, head, organs, and blood. Variety meats are produced from carcass offal such as livers, hearts, and tongues.

While Drop Credits have been depressed in recent years, Katelyn McCullock of the Livestock Market Information Center, says the value has been trending higher in recent months, especially for the hide.

"USDA AMS comes up with a byproduct value based on different organ meats and variety meats, as well as hide values and assigns a weight to it for 100 pounds to come up with that value, and that is approaching $13 per hundred-weight which is the highest value it seems since about 2015, and one of the biggest drivers has been the hide value,” said McCullock.

She says the reasoning behind the increase isn’t exactly clear, but could be caused by a number of things.

“We've been talking for a long time about the decline in the leather industry, the seemingly lack of preference towards leather, both globally and in the US, we've seen cars move away from that, to some extent in sneakers," said McCullock. "We're wondering now if there's a resurgence in interest. Have consumer preferences actually changed, or is it because everyone went out and bought a new car and 2021 in late 2020. Is that part of this, is it more of a manufacturing issue.”

She says exports for 2021 are also a bright spot in the market.

“Exports really have not done well since about those high values in 2014 and it really seemed like that industry was not going to come back," said McCullock. "Now, if we look at cumulative year to date exports, whole highs are up about 62 percent, that's January to May data over 2020. But if we compare that to May of 2019 it's about 50 percent. So, still very strong numbers we're looking at on those whole hide values.”

She adds it's also important to remember that a limiting factor caused by the pandemic is available labor to fabricate carcass parts into variety meats that can be shipped to the international market.

Source: NAFB