German Perspective - 12.03.13
12/03/2013
Political and strategical fights at the abattoir doors for heavy males are dragging all hide prices up, although there is hardly any relation between the demand for heavy bull hides and light cows. Since you buy all or nothing at an abattoir in Europe prices are determined by the strong performers and no packer is paying any attention to the international price levels that are the reference for normal and regular hides. Abattoir prices in the north of the country are rising in sympathy with the premium hides from the south, while the prices paid at the abattoir for March bear hardly any relation to the real market any more. So, we have returned to a similar situation as the one we saw last summer when the equation was pretty much the same until the correction we saw in the last quarter 2012.
The only question that needs to be answered is if leather prices will rise again sufficiently to let tanners pay for the raw material they need to buy for the production of the coming months. So far the majority has either no option or is optimistic enough to believe that the next round of price negotiation will be successful in raising leather prices.
Sales of raw materials are sufficient to hold prices at least steady on average, and even firmer in several preferred niches. Even weeks of slower sales cannot break the neck of the firm market at the moment and one could come to the conclusion that there will never be a time again when hide prices could be seriously corrected and go down. Well, that is indeed the theory of some, but so far the day has always come when leather demand falls, the cash boxes are empty or higher slaughter forces suppliers to attract buyers with lower prices again. For the moment history is just repeating itself and almost every week ends as it has started, with enough hides sold.
It’s interesting to mention in this respect that despite all the above, prices have not moved any higher for quite some time. If everything were as bright as many are painting it, one would have expected to see prices going even higher than they are already. Perhaps sellers are shy about asking for more, or buyers have set a limit at which they will definitely stay out. This has not yet been discussed and the answer hasn’t been given yet by the market.
This make many, including us, believe that the upcoming trips to Asia and the APLF fair in Hong Kong (March 25-27) will point the way forward. If there is any indication that the leather business will remain steady despite the high prices, the big suppliers of this world will not be shy to test new limits. If they feel that leather demand could be endangered and leather prices become prohibitive, they will still try to squeeze the last drop out of the market before surrendering. One way or another there seems to be nothing that can change the market until the end of March, and actually the market is following the same pattern as it does in the first quarter of every year.
Sales this week were limited by reduced offers because we wanted to see first what the buying prices would do. With the support of the US dollar, a handful of sales were generated and this was almost across the offer list. Prices were mostly steady.
The kill: The kill was a fraction better this week; nothing special, but some more hides were coming in. The weather is still pretty cold and farmers have to watch their feed inventory and costs. However, before the cows return to the fields not much change can be expected.
What we expect: Due to the higher abattoir prices we will have to look for higher selling prices too. Tanners in Asia are now awaiting their visitors first and will then decide. So, the next one or two weeks are very likely to be a repetition of the past ones and prices should not move by much, if at all. Then we will most likely see higher asking levels.
| 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 |
€ 2.25 |
Steady |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1.90 |
Steady |
|
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1.80 |
Steady |
|
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 2.40 |
Steady |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 2.10 |
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 | € 1.55 |
Steady |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.50 |
Steady |
Share this story:
