German Perspective--30.03.10 - leatherbiz: Lea Leatherbiz

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German Perspective--30.03.10

30/03/2010
What happened this week: The week prior to the APLF is tradionally less active than normal. Normally this is related to the trips of many suppliers to Asia, so the normal desk-to-desk trading is almost inexistent. Those who are not travelling are mainly sitting at home and waiting for the report from their friends on the road. This year the reason might be a different one. The low availability of raw materials and constantly rising prices are preventing people from taking any quick decisions. Slaughterhouses are at best selling hand to mouth as a result; they believe they missed a lot of money. Whatever forward position they have taken in the past year has turned out to be wrong. With the unbroken demand we have experienced in the past month most producers are convinced, that the best is to hold onto material until the very last moment and just to sell it when it is physically in the warehouse. Traders are taking pretty much the same position and it would not be surprising if some are even holding some stocks to liquidate them at a profit during the show or in the weeks to come. Despite all the concerns everybody in the trade has after the long and steep rise of prices, remains convinced that the time that prices will come down is still far away. The main argument used is the reduced kill in combination with the strong recovery of consumer demand and the exceptional performance of the domestic Chinese consumption. There is no question that this has been the justification and driving force so far, but the key question to everyone in the business is now how things are going to proceed into the next leather season. We are again at a crucial market juction. Either leather prices rise sharply, or raw material prices adjust. Everybody knows this and so the market has become pretty sensitive. Buyers were hoping too early for corrections and sellers—in view of their empty warehouses played it rough and kept the upper hand. Until today the maximum has been pressed out of the market, but now it will need clear indications about leather prices to have a clear idea on the next move. Possibly we will get that next week. Trading this week was light. Only regular repetition was seen or the classical, late -in-the-cycle requests from buyers in the second line or traders sniffing around. However, there is also not much to sell and to be in front of all buyers in the next week at least some quantities were kept in hand. Prices went up with the support of the rising US dollar, but they can’t cover the present levels at the abattoir doors. The interest around was again across the board although the number of clients is declining and one can see that the business left on top of the regular programmes is just gap-filling. A lot of the big players have aleady disappeared from the stage. With the reduced availability this is not being recognised, but is is obvious.

The kill: The kill is stable now after the weather has returned to normal conditions. The next two weeks will be short due to the Easter holidays, which will cut into the production again. So the supply side will remain stressed also in the weeks to come.

What we expect: The coming weeks will most likely not bring much of a change. Until clear decisons about the leather prices are taken the real trend can’t be set. Until then the market will remain volatile with sellers in control. The market is now based on pretty short notice, which is increasing sensitivity even more. Let’s see now what the trade figures out in Hong Kong. 

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 € 1,75 Steady
  25/29,5 kg 27,5/28,5 kg 22/27 kg 25/26 kg € 1,60 Steady

Dairy cows

15/24,5 kg

22,5/23,5 kg

13/22 kg

20/21 kg

€ 1,60

Steady
 

25/29,5 kg

27,5/28,5 kg

22/27 kg

25/26 kg

€ 1,40

Steady

 

30/+      kg

33,5/35,5 kg

27/+   kg

29/31 kg

€ 1,25

Steady

Bulls 25/29,5 kg 27,5/28,5 kg 22/ 27 kg 25/26 kg € 1,75 Steady
  30/39,5 kg 36,0/37,0 kg 24/34 kg 31/33 kg € 1,65 Steady
  40/+      kg 45,0/48,0 kg 34/+   kg 38/40 kg € 1,45 Steady
Thirds 15/+      kg 25,0/27,5 kg 13/+   kg 24/26 kg € 1.20
 Steady
Thirds bulls 30/+      kg 38,0/40,0 kg 24/+   kg 33/36 kg € 1.10
 Steady


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