German Perspective—31.03.09
31/03/2009
What happened this week: The European market is still searching for a fair level of valuation. After the decline of the US dollar and the fall of prices in the US, sales into Asia were not that easy. Looking at the export sales number published over the past two weeks in the US, one could not help but be impressed by the sheer volume, but it also explained why interest in European hides was not as consistent as it has been for almost all of the first quarter.
With the US dollar remaining weak until Friday it took a bit of courage to book some of the orders and leave the currency position open. With the sharp gain of the greenback on Friday, most of the gap between midweek selling prices and asking levels closed. A few deals were possible despite the sharp increase of sales and market share from the US into Asia. Most business was consequently done in Europe and, despite the ongoing problems in Italy, most regular buyers were renewing their programmes and this has accumulated to another pretty satisfying sales week.
Most of the discussions in the trade are presently related to the trade show in Hong Kong taking place next week. Most players or suppliers expect more insight and market information about the outlook into the second quarter of the year. After the long and deep crisis, one had at least in the last weeks the impression that some kind of consolidation was going on. The decent sales that Europeans have enjoyed since beginning of the year have shifted to the US in recent weeks and this has given the impression that the leather business was picking up and that tanners were (and are) willing to cover their orders and replenish their stocks. As much as almost everyone, we would like to see a sustained improvement and a moderately rising market. One tends to remember many years in history where we had a similar situation in the market of the first quarter. Towards the end of the quarter purchases increased, market rose and everybody was quite confident for the near future. In most cases, though, the hope was disappointed as the market ran into trouble not much later.
Except for declining slaughter, there is not much to justify a better market performance in the second quarter. The situation in the auto industry is not showing any sign of improvement and the upholstery trade is entering its slow season. Shoes and accessories are definitely still seeing a rather steady performance, but can’t actually compensate for the decline in the other sectors. So we must at least consider that we could see a similar pattern this year and that some of the expectations arising from the first quarter could be disappointed, with enthusiasm fading further into the second quarter. Let us hope that the few signs of a generally improving economic situation, which some of the statistical data is indicating, will also spill over into the leather pipeline. There are still around the globe abundant stocks of hides that still need to be cleared.
The kill: The kill is again dropping sharply. Some think it is related to the end of the fiscal year in agriculture with a lot of short-term influences, and that, with the start of the next quarter, the kill will recover. At least for the moment, numbers are missing and weights are exceptionally low.
What we expect: It is almost impossible to predict anything for the coming week. We all have to wait for the results and impressions of the Hong Kong fair and to see if Asian buyers will continue their market activities. If the leather business is improving and there is still a certain backlog of orders to be placed in the pipeline, we could have a chance of holding the market and preserving a steady trend.
| 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 | € 1,00 | 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 | Steady | |
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 0,65 | Steady | |
| 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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