German Perspective—13.12.11
13/12/2011
Sometimes it is difficult to understand which policy people are actually following. The most stubborn sellers have overtaken the tribe and taken the lead in who is the price leader, from the bottom. Tanners have also become aggressive bidders, if not totally refraining from purchasing. Consequently, everything has been a bit of a panic. However, markets need that sometimes to release some of the pressure that has built up and, not only that, some grades had been overvalued for so long that one cannot be surprised by the adjustment now. As a consequences a lot of prices were surfing around and everybody had another story of a cheap sale here and there and tanners where happily pretending to receive a lot of offers with low prices.
While in Europe a number of programme sales took place at reduced levels, Asian buyers preferred to withdraw if the bids where not accepted right away. The bids were not even really attractive, but a lot of sellers are travelling and the increasing stories about desperate sellers made buyers brave and convinced them that the bottom of the market is still not in sight. We are in a classical bear market where everything becomes a negative attribute and nothing positive can be seen at all. Nobody wants to make any mistake and everybody wants to take advantage of the market and lower raw material cost. Totally understandable, but painful too for the seller. There might be good reasons to be concerned about the market and trend, but the price correction has now gone so far that a great part of the over valuation has been erased and we have reached much safer territory. If the global economy is going to crash then things may be different again, but anyone who still has a bit of realism and hope should not ignore this. Anyway, at this moment the downward dynamic is still in full swing and there is no chance that this will be turned around in a day or so.
A lot of pressure is also coming from other EU countries, where in some cases prices adjusted earlier and more severely, which has left the German market with very little room to defend. So, we are entering the final weeks of the year on a totally different sentiment than we started. Trading was decent in numbers due to renewed programmes in Europe, while Asia was pretty lacklustre with only some early birds at the beginning of the week buying. Later in the week all interest from Asia dried up. Prices were down by around 5% and this has eaten any margin.
The kill: The kill continues to fall and we are now well below normal seasonal levels. Abattoirs are making no margin and their expectations for Christmas seem to be pretty low. They have lowered cattle prices, which is not attracting farmers at all.
What we expect: The downward trend will persist but we feel that the majority of the fall is done. This may surprise some and doesn’t mean any turnaround, but further corrections of another 10% until the end of the year seem unlikely to us and the situation should start to calm down a bit.
| 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 | € 1,80 |
Pressure |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1.55 |
Pressure |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 1.55 |
Pressure |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1.30 |
Pressure |
|
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1.20 |
Pressure |
|
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1.75 |
Pressure |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1,65 |
Pressure |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.45 |
Pressure |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1.15 |
Steady |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.20 |
Steady |
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