Hide, Offal Value Continues 2016 Climb

Steer hide and offal values are continuing their 2016 trend toward a gentle, though uneven, climb toward the 2011-2015 average.

In the latest week, the total hide and offal value, called the drop credit since it entails everything that is removed, or dropped, from the carcass, was $11.95 per cwt.  This was up $0.03 from the previous week’s $11.92 and up $0.12 from the $11.83 seen the first week of the month.

For the third week of January, the average weekly drop credit was $1.38 per cwt, or 13.1%, over the same week a year earlier.  However, it was $1.80, or 13.1%, below the previous five-year average of $3.75.

For all of last year, the drop credit rose $1.24 per cwt, or 11.7%.  If prices follow last year’s trend and rise a similar percentage, the drop credit will be $13.21 by the first week of January 2018.

However, the average move is for prices to peak the last week of March and decline slowly from there.  Strength in the drop credit at this time of year is no surprise; continuing to climb after April 1 is a surprise.




As always, it was the hides that led the way higher last year.  Hide values comprise more than 44% of the total hide and offal value, followed by tongues and bleachable tallow at about 11% each.

Last year, heavy native steer hide values rose $2.00 per cwt, or 2.74%, to $75.00 per cwt from $73.00.  This slow rise in prices accounts for the gradual nature of last year’s average hide and offal value.

The average 2011-2015 hide price for the third week of January is $93.00 per cwt, according to USDA data.  This means this year’s price of $75.00 is $18.00, or 19.4%, below the five-year average.




The other items that make up the total hide and offal value together make up about 46% of the total.  However, aside from tongues, bleachable tallow and possibly oxtails, their contribution is so small as to be nearly inconsequential.

Beef melts, or beef pancreas, for instance, in the latest daily USDA by-product drop value report was listed at $0.01 per cwt.  Lungs were listed at $0.03, and head meat was valued at $0.10.

Many of those other products go for pet food or for meat and bone meal.  Tongues have a higher value because of their export potential.  Japanese consumers like them a lot and will pay $4 to $5 a pound, so it makes it worthwhile for importers there to bring them in from the US where they are not eaten by the average consumer.




Average fed exchange auction prices last Wednesday were $1.35 per cwt higher at $120.52, versus $119.17 a week earlier.

Cash cattle then traded lightly at $120 to $121.25 on a live basis, steady to up $1.25 to $2.  More trade was reported Thursday from $121 to $123, mostly $122, up $3.00.

Dressed-basis trades were reported at $193 to $194 per cwt, a gain of $7 to $8.

The USDA’s choice cutout Tuesday was down $0.03 per cwt at $191.74 per cwt, while select was up $1.34 at $188.17.  The choice/select spread narrowed to $3.57 from $4.94 with 92 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Monday was $133.28 per cwt, down $0.18.  This compares with Tuesday’s Jan settlement of $132.42, down $0.35, and Mar’s settlement of $130.17, down $0.50.