German Perspective - 15.07.14
15/07/2014
One cannot really trace any aggressive purchasing activity; so far, most of the buyers still believe that they have a fair chance to save on today’s prices. In contrast, the beef industry is trying to talk the market up and prepare for higher asking prices. However, very little has changed and tanners’ calculations have certainly not got any better in the past weeks. Consequently the only really interesting activity one can trace is a large amount of enquiries from new names searching for cheaper alternatives to the material they usually buy. Nobody is actually looking for better or even material that is different; everyone is trying to find a cheaper alternative or the miracle of finding a raw material that will give the expected quality at a price buyers feel they can pay.
In the end there was plenty of email exchange and phone calls, but not really many positive results, or any serious amount of business.Tanners are beginning to become concerned that the beef industry might be able to manage the hold prices steady into the new season. It is difficult to figure out how tanners will react if they feel that the calculations they have made will not work out. There is still the option either to cut production or to bite the bullet and hope for better.
In the automotive sector the situation remains different and several people seem still to be receiving orders for shipments right after the holidays when a number of model changes will take place, with the roll-out of some new models also scheduled. This normally creates a few ups and downs in short-term requirements not only related to quantity, but also to colours. However, in total this will not change things very much because most producers of automotive leather are operating at full capacity anyway and there’s not much room for large increases. This is forecast already in the production figures in the coming months.
Generally, we have to say that this year we had a pretty easy run into the summer holidays as far as supply of traditional fresh hides were concerned. Normally, by the end of May the traditional shortages due to the reduced kill make production and supply planning difficult. This year, despite good demand from the automotive industry, European tanners seem to have taken better precautions, buying early enough whatever they needed. With the rising kill beginning from the end of the summer, the total production of automotive leather can be much more easily calculated. Production capacities can only vary by the use of contract tanners or some extra shifts so the potential for any major surprise is rather limited and only a serious cut of production (not expected) could influence the business.
We found trading this week reasonably quiet; one would have expected more hides to be sold than actually were. However, with the low kill and the negative expectations for slaughter for the coming weeks it does not really matter. We would say most grades are in reasonable balance, with only lighter-weight salted bullhides the exception because they do not fit at all into the international price range and they are the main reason why abattoir prices require a serious adjustment.
The kill: Not much to say about the kill, because numbers and weights are as low as they could be in the summer season. We are now passing the slowest period of the year and in six weeks from now things should start to get better again.
What we expect: It will be interesting now to see if the sniffing around this week will be turned into business next week. Generally we do not see any change from the constant hand-to-mouth business which we have been seeing for several weeks now. Except in isolated cases, we cannot see tanners being willing to pay more for hides and sellers have no intention of selling them at less.
| 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 | € 2,45 |
Pressure |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 2,05 |
Pressure |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 2,20 |
Pressure |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,80 |
Steady |
|
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,70 |
Steady | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 2,25 |
Weak |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 2,30 |
Pressure |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 2,15 |
Steady |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1,75 |
Steady |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1,70 |
Steady |
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