German Perspective—19.05.09
20/05/2009
Not only have we had a weaker US dollar, but also stiff resistance from buyers to rising prices; all of this has brought many people’s feet back to earth. The only ones who really enjoyed the situation were butchers, who are receiving at least 20% more for their hides today than they were at the beginning of the year.
The US dollar has lost about $0.10, which is equivalent to about 7% since the best levels we have seen in recent times, about $1.26 to the euro. Nobody is actually arguing, that business, in particular with Asia, has not been better since February, but neither has this been really converted into higher prices. Nor can anybody today really guarantee that demand is going to persist throughout the summer.
From the European tanning industry, it’s unlikely we can expect much support until the end of September. If it is not that business levels are insufficient, then it is the season of the year and the forthcoming summer holidays that are going to keep demand under pretty tight control in this part of the world.
Crisis management
So we are going to continue to be entirely dependent on Asia or, to be more precise, on China. A lot of so-called experts have tried to make us believe that the worst of the economic crisis might be over. This might even be true, but it still it doesn’t mean that things are going to be significantly better in the short term. For the moment we see rising stocks in many tanneries rather than improving leather orders to consume all the hides that have been bought over the past three months.
Market activity this week was again almost completely restricted to the markets in the Far East. Some tanners are still willing to extend their inventory positions and they continued to buy some hides. It was more than difficult to squeeze a bit more from many of them just to compensate for the decline of the US dollar. Some other sales have been made because of seasonal preferences for hides by some producers. However, we cannot report a real and regular selling week. We are also now entering the summer season, and particularly upholstery manufacturers are entering the low production season.
The flurry of interest that we have seen from the automotive tanners has also faded and, it seems, they have for the moment filled their immediate needs for raw material. They will definitely have another round of purchasing in front of them before they close down for their summer vacations and this should at least be enough to hold the market for good-quality heavy hides owing to the reduced slaughter at this time of the year. The market for cows will continue to be entirely dominated by buyers in China and we can only hope that they are optimistic about the future and that they are going to take all the hides bought and killed from now until September.
The kill: The kill continues to be reasonably steady for this time of the year. In particular the level of cows remains pretty high, which is the direct result of the very low prices for milk at the moment.
What we expect: For the time being it seems that everybody is happy with the moderately higher market. The main driving force is presently originating in the US with the continuing high levels of sales every week. We remain, however, pretty cautious about the market situation until we really see a solid rise in finished leather consumption. For the next week we don’t expect much except currency variations and some players trying to push the market still higher.
| 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 | Steady |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1,00 | Steady | |
|
Dairy
cows |
15/24,5
kg |
22,5/23,5
kg |
13/22
kg |
20/21
kg |
€ 0,80 |
Steady |
|
25/29,5
kg |
27,5/28,5
kg |
22/27
kg |
25/26
kg |
€ 0,75 |
Steady |
|
|
30/+
kg |
33,5/35,5
kg |
27/+
kg |
29/31
kg |
€ 0,70 |
Steady |
|
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,10 | Steady |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 0,95 | Steady | |
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 0,75 | Firmish | |
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 0,50 | Weak |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 0,50 | Weak |
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