German Perspective - 11.02.14
11/02/2014
We have counted the number of serious mails which have come in over the past ten days and there were only five of them. Two were just reminding us that people are on holiday and work will only resume in mid-February. The other three seem to have been sent after a serious dinner, with bids about $5 below the present market level. So, we were left alone with regular business and preparations for the coming weeks, after the return of everyone in Asia.
There were some letters of credit that had not made it through the banks before the holidays and shipping space had also become pretty short due to the holidays. This means plenty of work to re-schedule shipments and to remind people to push their banks to make up for the delays. It seems it will take some time this year until all is back to normal and running smoothly again. Most vessels leaving Europe between now and the end of February are already fully booked (at least for hides and skins) and this could cause some serious delays for shipments that have to be re-booked.
With little trading going on, one had more time to look at general matters and information. At this point it may be worth mentioning that Germany as a destination is turning up far more regularly in US export statistics. Not that the numbers are of any real importance to the market in the US, being barely 1% of the weekly kill, but adding up the numbers since last October, one has to assume that a good deal of regular EU males have been substituted. Sometime it only takes a little thing to disturb the balance of the market and the few thousand hides that have been reported mean these at least haven’t come from regional supplies and that some tanners have become pretty serious about not letting European prices rise for ever and to source globally to reduce dependency and have more options in cost averaging.
There are possibly other motivations too, but in the end it is the result that counts. After pretty surprising numbers slaughtered until mid-Janaury, the numbers have now fallen quite a bit and the kill is more what one would have expected for this time of year. In particular males are falling short and this is interesting for the market trend in the coming weeks. If the numbers remain at the levels we are seeing now there will be a shortage of fresh, chilled hides for the regular programmes. This has normally made packers and their marketing arms pretty ambitious in their pricing and this what they will try again.
If this happens we will learn a lot about the real situation. How many have built up stocks with the abundant supply recently, how many salted hides are ready to meet the demand, how willing are tanners to buy salted and alternatives to prevent prices from going higher? There are pretty interesting times at the end.
Trading and selling this week was rather patchy. A load here and a load there, but nothing really worth mentioning. For the lots taken asking prices were paid and until mid-week currency rates were a help too. What had been sold was either for the high end or the low end of the market and there was still more demand for females than for males. Lamb and sheep remain in the doldrums, but should have reached attractive levels again.
The kill: The kill hasn’t become any better and we would even say it dropped another few percent. In particular bulls are missing in the slaughter-mix and this doesn’t surprise us after the high kill and pretty poor beef sales for prime cuts after Christmas and New Year. With cold weather these last few weeks, hides have become more ‘wintery’, but it is already February and this should not affect things too much for what remains of this winter season.
What we expect: There is still a real trigger missing for something new. The big question is if the lower kill really means something to the market or if tanners have built enough inventory to stand back or consider some of the overhanging salted stocks as a filler. Also we are waiting for news from Asia when tanners come back and figure out that not much has changed for them yet. Generally, suppliers still don’t se much risk to their positions and so they will just wait and see what next week offers.
| 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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