German Perspective - 12.11.13 - leatherbiz: Lea Leatherbiz

Intelligence

German Perspective - 12.11.13

12/11/2013
What happened this week: The currency market was again in the limelight this week. With the European Central Bank unexpectedly cutting interest rates and the US supplying better then expected data regarding growth, the euro came under pressure again and saw a roller-coaster ride in the second half of the week. Thursday afternoon it gained within minutes almost two cents before settling back and getting another hit on Friday afternoon. We are back where we were in September and EU hides have become more competitive on the overseas markets again. So, those who believed that the currency market would be the main driver were correct. As far as business is concerned everybody is impressed by the strength the US market is displaying.

Many are discussing how far tanners are really willing to support the market in volume, or if they are rather buying to support the leather prices and the positions taken in August and September. In any case, those few who haven’t covered their needs in time now only have pretty expensive hides to buy. The main driver behind the market remains the exceptionally strong demand and the record prices levels for splits we have been seeing for a while. Tanners are desperately searching for cheaper alternatives, pushing cows and more economic origins forward.

Everything is being influenced a bit by the ‘cui bono?’ effect. There is no question that a rising market is always good news for the supply side as product moves quickly and this can also be seen over the past two weeks when letters of credit and deposits for September and October came in quickly and easily and customers wanted goods shipped quickly so that they would arrive before the closure for the Chinese New Year holiday at the end of January. Let’s just hope this is also going to happen for the more expensive sales of today.

European tanners were more quiet this week. They seem to be more cautious about the situation and about their finances. Although the real leather demand demand in China remains pretty much unclear one can find a number of usually well informed people who report a slowdown in the demand for shoe leather in China, while in Europe most people are seeing lagging orders for upholstery. How this fits into the firm hide market can only be guessed.

For the moment suppliers are using the supply card, threatening clients with very negative information about the expected slaughter for 2014. The cheap money policy and the missing alternative for investment might also attract people to buy and stock hides rather than hope for cheaper prices fitting into the calculations. Strange in all of this, however, is the performance of the ordinary lamb and sheepskins, the prices for which have hardly benefited at all from the bonanza of hides and splits. It is strange, for example, that for garment and lining leather, and even for some women’s shoes and handbag leather, where they could be used as an alternative against excessive prices in bovine leather, these skins are not more popular.

Trading and sales this week were just about normal and all activity came from Asia. Cows and low grades were in the focus as the cheaper options. Heifers, which in view of the prices quoted from the US should be an interesting item, were only able to attract bids well below the market and bulls (dairy steers) are still too expensive for the Asian market no matter what the US hides are quoted at in the meantime. Volumes of sales were normal and additional offers made on Friday to test the market did not find any interest. Prices were steady in US dollars as they have been for a while, but revenues in euro rose, depending on what decisions one had taken on the currency market.

The kill: The kill is still reasonably high, but the peaks of slaughter seem to be behind us already and the numbers have declined by about 10 % from the peaks we saw some weeks ago. Normally we should see better numbers in November, but packers are complaining about the beef business. Weights are stable now at the levels we reached in mid-October.

What we expect: Calculations have improved due to the currency situation and this may trigger renewed optimism. Most likely, some people will try to test the waters and see if they can squeeze a bit more out of the market. Well, all one can really get at this moment are windfall profits from the currency levels. In euro we fail to see a short-term chance for higher levels and we will now focus entirely on the grades that have so far not seen any benefit.

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 € 2,50
 Steady
25/29,5 kg 27,5/28,5 kg 22/27 kg 25/26 kg € 2,20
 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

€ 2,10

Steady

30/+ kg

33,5/35,5 kg

27/+ kg

29/31 kg

€ 1,85

Steady

Bulls 25/29,5 kg 27,5/28,5 kg 22/ 27 kg 25/26 kg € 2,30
 Steady
30/39,5 kg 36,0/37,0 kg 24/34 kg 31/33 kg € 2,35
 Steady
40/+ kg 45,0/48,0 kg 34/+ kg 38/40 kg € 2,20
 Steady
Thirds 15/+ kg 25,0/27,5 kg 13/+ kg 24/26 kg € 1,60
 Firmer
Thirds bulls 30/+ kg 38,0/40,0 kg 24/+ kg 33/36 kg € 1,70
 Firmer



Leatherbiz.com cannot be held responsible for content if the language setting is changed from English.

The translations provided by Google Translate are automated and therefore might not be accurate and may contain incorrect, offensive or misleading language. We offer this facility as a guide only.