German Perspective - 30.10.12
30/10/2012
For a very long time the suppliers of this kind of material had no need to salt material or keep it in their warehouses. Consequently, some people are trying to resolve the problem by reducing prices while others are now trying to organise salting and warehousing facilities for the near- or medium-term future. Those who will have to salt more bull hides will limit the capacity for salting cowhides, which is either increasing the need to sell cowhides fresh, chilled to Italy or to find a fair balance between the males and females and the curing capacity. In the end none of these options will be easy to put in place and this is weighing quite heavily on market prices.
As a matter of fact the gap between the prices achievable overseas and prices the trade is talking at the moment within Europe is widening rapidly. In a normal market situation the hides would immediately go wherever prices are best, it will still need a little time until all the necessary infrastructure is set up to get the hides prepared for overseas export.
For the time being the balance between the two options is seriously disrupted and possibly also creating quite a few headaches for some of the players.The present market situation also represents what we have been monitoring already for quite some time. While Asia and in particular China is still enjoying a reasonable amount of leather business, the European crisis has now reached the tanning industry now. It is not only about a lack of demand from EU consumers, it is also a problem of finance that is limiting the purchasing power of many factories. This combination is reducing production and raw material demand in a period when normally leather production is rising to the highest levels of the year.
Pretty wide gaps between the various markets can never really be sustained for long. With most overseas suppliers still optimistic about the market they might not be willing to recognise the situation in Europe yet. This might give the market here the chance to stabilise, although from, economical logic we still have some room to get back to solid price levels that have been approved in the long term to be a stable basis for leather production. For the time being we are still sheltered by the prices quoted from overseas origins.
Trading and sales this week have been pretty slow again. In the end we were lucky to grab the odd bid from overseas and thanks to our regular clients we were able to book sufficient business in the end. We are again worried about the low prices that are quoted from other suppliers from central Europe, which from our point of view can hardly be explained. We have been able to get steady prices for dairy cows, but we had to make some concession on salted bulls just to move some quantities that European buyers are not wiling to take at the moment.
The kill: The kill has now stabilised at higher seasonal levels. The balance between male and female is not intact and we are seeing a very high kill of cows and an extraordinary low kill of bulls. Packers complain about not finding enough male live cattle and poor returns for the sale of beef. Temperatures are falling and we should see higher kills in the coming week.
What we expect: All the pressure that has built up for so long is now fading. Those who had a stubborn hold on the market are now falling over each other to sell hides and reduce levels. Without a correction in the overseas markets too we should not be far away from a (temporary) bottom. However, nobody knows how many hides are still around and need to be turned into cash.
| 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 | € 1.80 |
Steady |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 2.00 |
Weakish |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1.75 |
Weakish |
|
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1.55 |
Weakish |
|
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 2.10 |
Weakish |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.90 |
Weak |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.75 |
Weak |
|
| 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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