German Perspective - 05.03.13
05/03/2013
There is a lot of speculation as to why the kill remains below average. One aspect is the time of the year and is a seasonal matter. But the horse meat scandal has also left its mark and retailers and slaughterhouses are presently discussing strategies for offering consumers greater reassurance over the quality of the meat they buy. This might be good news for local beef suppliers. Retail chains are announcing that they will run a 100 % German beef strategy, even for their convenience and fast food business, and no imported beef or supplies from traders will be used until they can be considered safe again. Stocks on the shelves are down, but if consumer confidence returns and stocks are replenished we might see a decent increase in slaughter eventually. Well, all this is a theory and until then we have to live with the fact that the number of hides entering warehouses is reduced and this means that sellers remain unworried about the slowdown in demand. However, those who were counting on a strong recovery of Chinese interest after the Chinese New Year holiday must feel disappointed. Business is never at zero, but the times when one could chose from the bids coming in every day have been over since the middle of January and selling hides has become hard work again; for a while it was just a question of distribution.
This does still not apply to premium-quality male hides, for which the demand from the programmes of the premium automotive tanners is hardly covered by the weekly slaughter. Many report that this demand is pretty much dominated by one of the big German groups while the others are said to be running pretty much as normal. It seems also that behind the demand there is a bit of politics and strategy rather than only the sales of cars. Ramp-up in production of some new models may also play a role because decent export business alone for the premium brands can hardly explain the situation.
What certainly applies are business strategies. More of these specific hides are going into wet blue production these days rather than going into the automotive tanneries directly and in the last quarter 2012 a number of the big players were not willing to take the extra slaughter at lower prices because their financial departments did not want to see high stocks at the end of the fiscal year. Some were smarter than others and today have better raw material stocks bought at a lower price. All this would not be a problem if there no side effect on the general abattoir market. The hype about the heavy males is dragging all other hides up too and this cannot be justified by general levels of business.
The firmer US dollar is helping export calculations a bit but standard hides like cows, heifers and lighter-weight bulls are linked to international levels and there is not much room for manoeuvre considering that general demand for hides is not at all brisk these days. Consequently margins are beginning to become tight again and further price rises at the abattoirs just because of the automotive market would not reflect at all the market as a whole. However, has the trade or have the packers ever thought about this? Certainly not, and they will hardly to start now.
A constant point of discussion are the deterioration of payments. While those with a strong hand are still paying well and in time, the majority of customers are paying slowly in Europe. Also letters of credit and down payments from Asia require reminders in some cases, and sometimes a second reminder. It is not yet a serious problem, but the decline in cash resources and the intensive thoughts about money allocation of many clients can be felt. Trading and sales haven’t been brilliant this week. There is still enough interest not to worry, but generally there are only selected clients buying. Prices have been steady and in case of Asia the firmer US dollar has helped calculations a bit. With hardly any males available business was almost entirely focused on cows and low grades in limited quantities.
The kill: The kill fell again this past week. The numbers are really painfully low and butchers are not indicating any improvement soon. We are a bit more optimistic, but have no idea when this is going to happen. Normally with the weather getting better, but around Easter (March 31 this year) at the latest, beef consumption should pick up again. The slaughter mix sees still more females than males and weights are just about the seasonal average.
What we expect: We are now starting a new month and there are just about three weeks until the APLF fair in Hong Kong. It is unlikely that sellers will officially let the market slide and March is still one of the busier months for leather production. This, combined with the low kill, should prevent the market from any major variations. Sellers will not sell much more cheaply and buyers are hardly showing any indication that they would go with a higher price. It seems that the tricky time will start in the next quarter when lower production in Asia, warmer temperatures in Europe and the cash-flow situation could dictate new conditions in the market.
| 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 |
€ 2.15 |
Steady |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1.85 |
Steady |
|
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1.75 |
Steady |
|
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 2.25 |
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 | € 1.90 |
Steady |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1.50 |
Steady |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.50 |
Steady |
Share this story:
