German Perspective - 12.02.13
12/02/2013
Although the three-cent rise of the US dollar is certainly highly appreciated, it didn’t help during the week because there were almost no overseas buyers available for business and it seems that all the decision-makers had already packed up and cleared their desks for an extended holiday leave.
In Europe the situation seems to be a bit different and the low slaughter due to the current Carnival season and the strong performance of the luxury car producers caused some additional interest in standard hides; one had to believe that there were still some drums that needed to be filled. However, these pockets of the market are always the same. The missing buffer of raw material warehouses in the tanneries is becoming an increasing problem for the market. Tanners plan just in time and that means prices can jump in hours when there are not enough hides available. Anyway, this week was a pretty quiet one for sales overseas while every male hide offered in Europe was sold. We don’t think that this is going to be long term because prices have again reached critical limits and it doesn‘t seem that the buyers will actually let them escape in the weeks to come.
It is also the question of what is dominating the market: the few niches for specific and high-quality materials or the mainstream products that are used for the mass production of leather? Money is becoming an issue too and secretly people talk here and there about payment delays and there are also rumours from the Far East that in some critical markets the letters of credit are not coming in the way they should. In some cases, there is talk of material being stuck at the port of destination. These might be isolated cases but a handful of containers that need to be resold gives the market a certain sign and does nothing to increase the confidence of players in the present market situation. We still believe that there are sufficient numbers of hides around, although they might not be the ones the market is presently looking for.
Conversations during the past week left a bit of an impression that the number of players and pundits who think the market might look a bit top-heavy has definitely increased. However, it seems too that there is still something for the bull and the bear to point to to underpin their positions, depending on the main raw material they are selling. While the sellers of premium raw material may still have the upper hand, the situation may be slowly changing for the rest.
There have been a number of Asian buyers travelling in the past two weeks and despite the generally positive outlook they have for the leather business it became clear pretty quickly that they are not willing to increase constantly the amount of money they will pay. Many of them might already have bought enough hides to take it easy for the rest of the month.
With the production season slowing down in Asia in the second and third quarter there might not be the total volume of demand many people expect. It has become pretty obvious that the improved leather prices many producers obtained in December have been eaten up by the recent increase in raw material prices and buyers are not willing to consider higher prices unless covered by another round of higher leather prices. Before they have the security of better leather prices they will not even consider paying more for hides.
In total numbers sales were reasonably satisfying this week. However, sales were totally focused on males and with the absence of the Asian customers there were hardly any sales of dairy cows. Prices for males were pretty steady with the levels already reached while we couldn’t trace any price for females during the week.
The kill: Everybody is talking about the low kill but we can’t see anything unusual from the levels one would expect for this time of the year. It is less than average, but it is certainly not less versus the usual declines you always find prior to the Carnival season. This coming week, the kill will be down again owing to the holidays in Catholic parts of the country. After that we should return to steady production.
What we expect: What we expected has happened, with renewed contracts in Europe and the absence of the Asians. For the coming week we expect the absence of clients in Asia to continue and for there to be an absence of clients in Europe too. Consequently, if there is much buying activity this week it would really be a surprising indication of a firm market, but we don’t believe it will happen. Asking prices will stay unchanged, and the real market will return again the week after.
| 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 | € 2,30 |
Steady |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 2.00 |
Steady |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 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 |
|
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1.70 |
Steady |
|
| 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 | € 2.05 |
Steady |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.85 |
Steady |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1.40 |
Steady |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.40 |
Steady |
Share this story:
