German perspective - 28.1.14
28/01/2014
Like in Europe prior to the Christmas holidays, everything is pretty tight. Banks and shipping lines are struggling to get everything done in time, so that all can progress smoothly during the holiday period. It was also busy on the business side and a good number of tanners will have to take decisions for their raw material supply after their return from vacation.
A number of clients were willing to take some hides as long as they were reasonably priced and this meant it was mainly the price dictating business. The cheaper pieces were sold quite quickly but anything over the magic $100 level was more difficult and anything above $110 was almost impossible - at least in Asia. In Europe, tanners were also concerned about prices and were testing the water to see if anyone would consider a change. It doesn't seem that they had much success.
It is obvious that due to the high slaughter since October the pipeline is far better filled than it has been for a long time. There is a clear indication that a few more hides in salted state are sitting around than the market is willing to take and this applies in particular to the males in the medium and heavy weight ranges which are exceeding the $110 level in Asia.
In Europe, the slaughter and the break over Christmas means there is enough to fill the drums and there a few more hides in salted state. This means two options: either the sellers lose faith in the market and will finally surrender, or they will wait for the lower kill, which will start soon, and welcome the buyers when they have to fill their drums again - subject to leather demand.
On the buyer side in Europe one can see two different strategies. Some tanners have taken the chance of the better supply and filled their inventory and the ones who have been able to store salted hides have built up a stock. Those who are depending on fresh hides had less chance and so they have to hope for good kills.
There is another factor which has reduced the supply pressure and this is the arriving overseas hides which some tanners tested to avoid the dependency on European fresh hides. The price spread was too inviting in the last quarter of 2013 to ignore such options.
All in all, a number of European tanners are less stressed than some months ago, although it depends on the financial resources of the players. Not everybody had the financial resources to act when it was advisable.
The problems in the financial market which were seen in the steep fall of the currency values in Turkey, Ukraine, Thailand and others looked worrying, putting into question the positive outlook for the global economy for 2014. The USD was hurt too, which was not a surprise considering the greenback is not the 'safe haven' it used to be. The euro took most of the benefit on Thursday and Friday. This influenced the prices this week and if any small premiums were obtained they were melted away by the currency until Friday.
The easiest deals this week were obtained for heavy cows and ox/heifers whose price/weight ratio – not exceeding $100 and heavy enough to offer enough credit for the drop split – fit best into the plans of the Asian buyers.
Second on the preference list were the low grades, followed by lighter cows. Bulls were again only available in packages with their prices well over $100. The total volume of sales was enough to make sure that the volume slaughtered can be shipped in February…. hopefully.
The kill: After the unusually higher numbers in January so far, the kill dropped this week. There is enough cattle around, but butchers are complaining about beef sales. It is low season for domestic and there is not really big export demand either. We think there will be less production for at least 4-6 weeks.
What we expect: The Asians are now leaving and so there should be time for a break. The next weeks should be quieter but not much should change. We should keep a close eye on the financial markets because they could become a problem. Cash, finance and money are still a problem. Selection of clients becomes of high importance and is again the key to successful hide marketing. Prices should remain steady for another week.
| 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 | € 2,15 |
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 |
€ 1,95 |
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 | € 2,30 |
Steady |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 2,30 |
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 | € 1,70 |
Firmer |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1,75 |
Firmer |
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