German Perspective—03.11.09
03/11/2009
However, one should never forget that this is just a recovery and a return to something that can be considered to be a regular level of leather production. This will still be well below the one we were all used to in the build up to the big crisis a year ago. This might also explain why there is no common sense in the valuation of the situation. The fact is that there are still sellers around who obviously do not yet have full confidence in the market situation. This applies in particular for cows and so there are still rumours and prices swirling around that are considerably lower than what we would consider to be the present market levels.
One can hear almost daily about cheap prices for cows, mainly from Italy, and the ones quoted are well below the levels that seemed to be the level of trade in Bologna. The question is just how much one believes in the rumours and, even if there are isolated trades, how accurately they reflect the entire market.
On the positive side we find the number of enquiries from China remarkable. Many e-mails are coming in from trading companies looking for offers. Although this normally would indicate good demand and interest it needs also to be mentioned that the quality of the enquiries seems to be very low and most of it is just triggered by one-man shows that are looking for a quick deal. It’s also possible that there are bigger buyers behind these enquiries who are trying to camouflage themselves for whatever reason. The simplest explanation would be that they are just trying to check to see if they can grab some cheap offers or possibly to get around blacklists. Whenever it came to prices, payment terms and detailed questions about their kind of business the interest disappeared quickly. So, serious interest and business were limited to the regular customer base which was cautiously buying bits and pieces.
Dairy dilemma
Generally the market for dairy cows is considered to be about 10 % too high, but the established buyers do not dare to bet on the market slump and prefer to remain buyers at market levels. For bulls the situation is better. There is still good interest for males and buyers say that they are trying to secure some better quality material from Europe even at the present price tags to protect against too many low selections that are expected from US winter hides over the months to come.
So, volumes are not really large and the customer base might be still narrow, but the trend in China to raise quality levels is noticeable. Having complained about the falling value of the US dollar it has also to be admitted that the recent trend of falling values has halted during this past week and at the end of the week the dollar was about three cents higher than at the start. This has helped, but the levels are still insufficient and it would be appreciated if the euro could lose a bit of its strength.
News from the leather market showed moderately rising orders for upholstery tanners, and shoe and leathergoods are still still working at decent levels, although mostly at the higher-end quality range. Automotive business seems to be a bit mixed. While some are still pretty busy and constant in their production, others with less successful models seem to be suffering. The record production numbers in China of the large Japanese automotive brands speak volumes.
To speak about prices this week is difficult as explained above. Speaking about ourselves we can only report mostly steady levels with smaller variations on both sides. Sales numbers were satisfying and we are only struggling to sell enough of the low grades to get in full balance again. With the low kill in the past three weeks, in particular for males, current contracts are not being completed as fast as expected and this leaves the selling pressure light.
The kill: We thought last week that the the number of males in the slaughter mix would be low, but it fell even further. The total slaughter numbers are far from what one expected for this time of the year. We just continue to wait until it gets better, but it is late. Also weights are not where they are supposed to be. So, let us see how things develop next week. Numbers should be better.
What we expect: We think, that the market is in a fair balance now. For late December things look still a bit misty. Chinese buyers could slow down orders and shipments due to the Chinese New Year holidays and in Europe one could expect to see tanners take another extended break over Christmas. So, the market needs to be watched around the beginning of December. Until then it should not move much.
| 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 | € 1,30 | Steady |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 1,00 |
Steady |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 0,90 |
Steady |
|
|
30/+
kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 0,80 |
Steady |
|
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,50 | 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 | € 1,20 | Steady |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 0,70 | Steady |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 0,60 | Steady |
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