German Perspective - 13.11.12
13/11/2012
The discrepancy we noticed last week continued to dominate the market situation in this week just gone. Asia remains the dominant factor in business activity and in Europe the majority of tanners are still failing to trust the support that comes from that part of the world. Many buyers in Europe are still hoping for lower prices and continue either to bid low or just to refrain from any major purchases. Consequently business in Europe was pretty much limited to the few people who needed to renew their programme supplies for fresh hides. Other players are either already fully covered or believe their absence will force hide prices to go their way.
The markets in the east were again much more busy, but interest and bidding activity were no longer as brisk as we saw the week before. It seems to us that we are still just enjoying the shelter from the US market that is paving the way for us to receive the interest we see at the moment. We are still a bit worried about whether this this is serious interest to cover leather orders or just the typical ‘me too’ effect one can frequently see in China when markets are firm and rising steadily.
We don’t want to sound pessimistic, but we don’t like the way letters of credits are being opened at the moment. In a perfect world, buyers should be falling over one another to open letters of credits and get their product shipped. However, buyers are not that excited about having the material on the boats and this is even more worrying, considering that shipping space is not easy to obtain and it’s not long before the usual break for Chinese New Year (February 10). With present shipping times, by mid-December customers will start to hold their shipments to avoid arrivals during the holidays.
Another issue worth mentioning is the fact that there is no business enquiry for shipment in the new year already. This is something we have also heard from other sources and is generally not providing too much optimism for buyers for the first half of next year. It might be too early to judge, but it is definitely something we are going to watch with great care.
Leather business at present seems to be really good only in domestic China, while in the rest of the world confidence about consumer consumption is at least pretty limited. If the Chinese consumer can support the raw material prices we are enjoying at the moment is uncertain. Despite all the concerns, we are at least happy to see a certain market correction at the abattoirs and after a very long time we might be able to return to some kind of the economic reality.
The firmer US dollar is helping us as well, and this means that at least on paper the business situation has now finally normalised. We are just hoping that all the outstanding shipments still planned before the end of the year can move in a timely and orderly manner.
Sales this week were nothing extraordinary but we were quite happy to move some of the lighter-weight male hides. Cows found a steady-to-normal amount of interest and with the better currency situation we were able to hold revenues reasonably steady. Consequently we have to admit that the situation for November has turned out to be a bit better than we expected some weeks ago.
The kill: The kill this week was pretty decent again and there is no complaint about the numbers. We wonder where all the beef is being sold, but it seems that many packers are already stocking up for the Christmas period. Weights are now up to normal seasonal levels and we have to expect that the situation will not change much in the weeks to come.
What we expect: Without any unexpected market shocks we think that our prices have now finally bottomed out and a lot depends on when customers are willing to take positions now for the New Year. We are going to see a long break between mid-December and early January and this could bring some pressure back again. Until then we would be surprised to experience any major changes.
| 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 |
Steady |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1.75 |
Steady |
|
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1.55 |
Steady |
|
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 2.10 |
Steady |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.85 |
Steady |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.70 |
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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