German Perspective - 24.07.12
24/07/2012
This applies as usual in the vast majority to the automotive tanners, while most other segments have really shut their doors and will not take any raw material in the coming two or three weeks.
Is this making any difference to the market? No, quite the reverse. Sellers have become a bit more optimistic again and with still good demand for premium hides meeting very low slaughter, prices have definitely bottomed out and in some cases a few cents more were obtainable. For medium and lower-quality material the situation is a bit different and although there has been some interest from Asia price negotiations were actually more supported by the currency market then by customers willing to pay more for hides. We are benefiting from the strong position of American suppliers which continue to say that they are very well sold forward. This offers us and many other European suppliers a good chance to place hides in Asia at the moment.
The weaker euro is helping to get prices converted into euro that were not obtainable some weeks ago. All this is taking away a lot of the pressure that we saw in the second quarter and, with the very low seasonal kill, butchers and sellers have become more ambitious again. We don’t see prices moving very much, but a lot of the worries that had been circulating in the trade due to the poor economic outlook have been wiped away.
It might be a bit too early to say; we will see when the summer holiday period is over and tanners decide on their raw material needs for the rest of the year. So far the situation is pretty similar to that of 2011 and most people will remember that things worked out totally different in the last quarter than everybody expected. This year the outlook for the global economy is far less positive. However, in 2012 the supply card is being played and this is keeping the market in tight check. Lower kills in various supply markets and very tight margins in beef production have enforced the beef industry to gain more control of their by-products in expectation of higher prices and added-value.
While the added-value could be found in high-quality products, one can still debate if the approach of limiting supply will work long-term. So far it has, and the controlled availability of material in the market has created sustained and overvalued average prices.
Trading this week was light, but still enough to clear most of the production. Every week there is still a buyer round the corner, willing to take enough to move a sufficient number of hides. Some isolated letters of credit are being delayed by banks, which is making shipments less smooth than earlier in the year. Prices are supported by the value of the dollar and all in all some top trades are fetching incrementally better prices while the rest is pretty steady. Interest was across the board, but again a bit better for males than for dairy cows.
The kill: The kill remains very low, but at least in our region we should have seen the minimum levels now. Maybe another two or three weeks and then the numbers and weights should improve again. However, beef sales and prices are not really helping the industry much at the moment.
What we expect: We still think that the market is currency-driven. Prices fluctuate according the euro value and trading will be pretty limited in the next weeks. Asian buyers will continue to sniff around and take whatever they get at steady levels in dollars.
| 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 | € 2,10 |
Steady |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1.75 |
Bottomed |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 1.95 |
Bottomed |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1.65 |
Bottomed |
|
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1.55 |
Bottomed |
|
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 2.15 |
Steady |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.90 |
Steady |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.80 |
Steady |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1.35 |
Steady |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.40 |
Steady |
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