German Perspective—17.03.09
17/03/2009
What happened this week: At least for the moment the concerns displayed last week are being confirmed.
Activity during this week was very limited. Asian buyers see the desperate sellers from the US and let them move. As a logical consequence, European hide prices have become less attractive. This applies at least for medium-quality raw hides, which traditionally compete with their US counterparts.
Better material is still generating more interest and more Chinese buyers are attracted by the market rumours that one can buy top-quality hides for next to nothing. Some of them are quite surprised to find that this is, unfortunately, not true. In any case enquiries for top-grade raw materials are rising, though few of those making enquiries appear satisfied with the indicated prices.
For normal central European hides, interest was reduced this week. Still, some bits and pieces were sold, mainly dairy cows. The strong demand for bulls, which we saw mainly during February, has almost completely disappeared. This is not actually a surprise with the decline of the steer prices in the US. The prices of US males are still the trendsetter in this field. Many buyers still realise that there is no shortage of mainstream hides and consequently no need to rush to take long-term positions.
So, we continue to see mostly hand-to-mouth buying, with pretty quick shipping requests. The most active buyers are still tanners from China who supply mainly the domestic market there. This can also be seen from the large amount of ex-pat Chinese buying ‘for friends’ in China on an ex works basis. This is traditionally done for smaller factories in China that cannot obtain import licences or don’t want to operate through official channels.
Looking at the activity from China in the first quarter, one has to assume, that consumer activity in mainland China is much less influenced by the global economic downturn than any other part of the world. However, all other markets remain pretty depressed, although it is difficult to confirm this from the reports and indications coming out of larger retailers and manufacturers.
Retail statistics in the US are not reflecting the exceptionally pessimistic outlook and the budgets and forecasts which have been published for the next season(s). One cannot help but get the impression that budgets for 2008 were far too optimistic and, in view of the crisis, the budgets for 2009–2010 are set too low. The motto of the marketing and sales departments is still pretty cautious; they prefer to beat lousy forecasts rather than admit that they can see any light at the end of the tunnel before anyone else admits to seeing it; nobody is being punished or questioned for playing the pessimist.
As already mentioned were sales not brilliant this week and prices suffered moderately also, mainly from the weakening US dollar on the export side. In this market environment it is funny watching processors compete for supply. The trade is concerned about further structural changes in the industry, but this will not change global market price levels.
The kill: Still no change in the slaughter numbers. They are still below average, but good enough to satisfy the market need for hides. We are now entering the last month of the heavy season before hide weights will rapidly fall again.
What we expect: We continue to believe that business will remain difficult for the weeks to come. Prices will remain under pressure unless the dollar begins to see sharp gains or the global demand for hides increases, absorbs more hides and liquidates the stocks that are still burdening many packers and processors around the globe. Let us hope that retailers are willing to place better orders soon and that APLF is a success.
| Type | Weight range | Avg. green weight | Salted weight | Avg. weight salted | Price per kg green weight | Trend |
| Ox/heifers | 15/24,5 kg | 22,0/23,5 kg | 13/22 kg | 20/21 kg | € 1,30 | Struggling |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1,20 | Struggling | |
|
Dairy
cows |
15/24,5
kg |
22,5/23,5
kg |
13/22
kg |
20/21
kg |
€ 0,80 |
Struggling |
|
25/29,5
kg |
27,5/28,5
kg |
22/27
kg |
25/26
kg |
€ 0,70 |
Struggling |
|
|
30/+
kg |
33,5/35,5
kg |
27/+
kg |
29/31
kg |
€ 0,60 |
Struggling |
|
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,05 | Struggling |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 0,90 | Struggling | |
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 0,70 | Struggling | |
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 0,50 | Struggling |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 0,50 | Struggling |
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