German Perspective—02.11.10
02/11/2010
The high kill and the limited interest of suppliers in salting and stocking heavy hides play into the hands of the tanneries and they are intent on driving this market down by another 5%–10 %. November seems to be the breaking point and we are curious to see who will win the battle. Other grades seem to be in better balance. It seems that at least in western Europe producers have been able to sell enough volume of standard grades and types to lift some of the massive pressure the market faced in September and in the first half of October. With the corrections that have so far been happening in the UK, Ireland, and central Europe, the leather industry was willing to buy certain volumes, and in particular strong demand for consumer products in China has created enough interest from the tanning industry to prevent further and larger price reductions in the last few weeks. If hides can be offered at reasonable price levels, they will still find enough takers. The outlook for a further appreciation of the Chinese renminbi has made tanners willing to purchase in the expectation of a good shopping season for the Chinese New Year and strong consumer demand in 2011 in general.
Reports are confirming that the demand for upholstery leather in China has been better lately and so leather demand is still decent there. Other market segments are doing well as long as the interest of the final consumer is met. In Europe we find it difficult to generate any real news. Upholstery tanners are still reporting flat orders with the exception of some cheaper articles, specialised shoe tanners are still seeing a good and steady order book and the small section of producers for the luxury segment can neither meet demand nor can they really see the end of the order book. However, as good as things are, the determining factor remains the price in all sectors. If asking levels exceed a certain level buyers are backing off. Consequently the market remains pretty sensitive and ready for any kind of attacks. Any major change in the situation will drive prices quickly either way. At this moment it doesn’t seem that there is any major threat to the market with leather demand still being stable and sound, but any change out of the blue (financial markets political issues and so on) could trigger significant changes in the price trend.
Fundamentally the market remains on reasonable ground, due to the steady and positive demand for leather globally, but week to week it is a challenge to make sure things are not quickly turning negative with increased seasonal supply. Trading activity was reasonably light during the week and the number of bids to choose from was significantly reduced compared to recent weeks. In most parts of Europe we have a long weekend, which might have an impact on tanners, while in Asia everything is just price related. Only a handful of sales were generated with the main interest still for cows and heifers at more or less unchanged levels.
The kill: The kill remains on increased levels, but noting unusual for this time of the year. The numbers are good, but not exceptional. Hide weights, in particular in our area, remain at lower than normal levels for this time of the year. Being now in the high killing season we don’t expect any substantial changes in the number for the month of November.
What we expect: Although the week was rather quiet we think that there is a fair chance that the market will remain stable. Risk factors, however, still apply. Currency fluctuations, the surplus of extra heavy material and stocks of unsold hides in eastern Europe could still become influential. There are still quite a view expensive and unsold hides around and fortunately they were bought expensive, so that sellers are not really willing to dump them as long as financial resources allow. For the week to come it seems that the wait-and-see attitude will remain dominant and one can’t really expect any major market change. It seems it will take a bit more time to establish a real and new direction. Most will also wait for the new November abattoir prices.
| 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 | € 1,85 | Steady |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1,65 | Steady |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 1,65 |
Steady |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,45 |
Steady |
|
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,30 |
Steady |
|
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,80 |
Pressure |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1,70 |
Pressure |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1,50 |
Pressure |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1.10 |
Steady |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.15 |
Steady |
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