German Perspective—01.09.09
01/09/2009
What happened this week: This week was only dominated by the activity in Europe for fresh, chilled male hides. European tanners needed to renew their delivery programmes for September and October and had to bite the bullet as far as prices were concerned. It took a while for them to swallow the steep rise, but in particular the automotive tanners seemed still to have a need to cover productions and to buy back into the regular supply market, which they had left for almost six month in the first half of 2009. In combination with a lot of changes in the supply structure this opened the door for the massive rise in prices in the last four to six weeks. Cows could not benefit from the situation and the prices paid at the abattoirs in August have not been reflected in the market. The cow market was already a bit top-heavy at the beginning of July and there was never any reason or indication, that there was any room for more in the short term.
The upholstery business has not seen any recovery yet and everything is based on hope at best. The weak US dollar is not helping either and the restricted credit insurance limits are limiting the sales potentials in Italy anyway. Altogether there was no room for raising prices into the $50 range, except where there was some speculation and competition between a number of hide processors. What they had seen in the market and their crystal balls will remain their secret, unless the trips in Asia and the general assembly in Shanghai bring the information into the public domain.
If one wants to be optimistic about the market and the future, one has to believe in the positive news from several big economies. Their may be polls and indicators showing an end of the general crisis, but it remains to be seen if this will lead to increased demand for leather and a sharp move in the supply chain in the last quarter of 2009.
Apart from the general consumer demand we are also getting a bit worried about many leather substitutes in consumer goods. Being around the shops one has to notice an increasing number of furniture, shoes and garments that are made of artificial leather, and which often use misleading declarations to attract consumers and make them believe they are buying real leather. This is all the more alarming when we consider that leather prices in the first half were possibly at their lowest levels for a long time. Normally one would expect more rather than less leather in the shops considering that the price for the product had come down.
If there was a bright spot at all in retail and the first fall arrival, than it was the leather jackets and coats made from pretty nice cow and lamb nappa. Let us hope that the consumers respond well and offer retailers the courage to reorder for further seasons.
Asian tanners took a wait -and-see position this week, which is not really a surprise as they have bought a decent amount of hides already and will want to see now how desperate their suppliers are to sell on the new levels during their trips and at the All China Leather Exhibition this week. They will wait for the response and activity of their finished product buyers. Many will remember also that the market often falls immediately after the show before bottoming again in November. One may also remember that the kill season is going to start not only in Europe, but also in China itself, easing the supply side substantially again.
The kill: With the end of the school holidays the kill has gone up. This week, numbers were up substantially, easing some of the bottlenecks traditionally seen during the summer period. It remains to be seen if this can be sustained over the next weeks before the real rise expected in October. The weights have not yet really increased but we hope that this happens soon to help calculations.
What we expect: It is difficult to make any projections. The market looks top-heavy. Far more on cows than on bulls, but more supply will certainly ease a lot of the upside momentum as the leather business does not yet justify any further rises. A settling down or even a correction would not come as a surprise and would certainly be healthy. Next week will offer us more information.
| 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 | € 1,45 | Steady |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1,35 | Steady |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 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 |
€ 1,10 |
Steady |
|
|
30/+
kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,00 |
Steady |
|
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,40 | Steady |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1,25 | Steady |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1,10 | Steady |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 0,50 | Steady |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 0,60 | Steady |
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