German Perspective - 11.11.14
11/11/2014
It seems that the reduction in leather demand has only hit a certain part of the tanning business while others are reporting pretty much business as usual and are relaxed about their raw material procurement. They have regular suppliers and continue to buy from their standard origins. For those who are privileged enough to be part of this sourcing pool the situation is not so complicated. One can still sell what is produced and one has only to adjust moderately to the sliding market prices and then the product moves.
This is also reflected in the type of offers that are presently circulating around the globe. Either hides are simply too expensive or it is excess material that has piled up over the past months in expectation of better business at this time of the year. Reduced leather demand and the almost non-existent interest from traders makes it pretty difficult to sell anything outside the normal and regular supply chains.
Currency has become another very important factor. For us in Europe the rapidly falling value of the euro is the best protection against falling prices, while it is at the same time the biggest threat for those who run their business in US dollars. The euro has lost about 10% of its value agains the dollar since spring, making our hides much more competitive and offering the necessary room for price reductions where necessary. In a firm market our local prices would have exploded, but with reduced demand and the need for price corrections it makes life so much easier. Well, we had the opposite as well for a long time so we should just enjoy the moment and not forget that it will be different again eventually.
Slowly but surely many in the trade have begun to realise that tanneries will close their productions for Christmas six weeks from now and many in Europe are planning to stop soaking even one or two weeks before that. This leaves little room for placing the physical inventories that can be seen in many places. Without any short-term flurry or increased interest it is hard to see where these hides can be placed in the near future.
Generally supply is not a problem at this time of the year and it seems that you either have the option to dump or to hold well into 2015. Dumping can be seen already and every day you can hear stories about somebody selling a block of hides far below market levels. Officially prices still remain under control and the market is in an orderly retreat mode.
Trading and sales this week were reasonably quiet: bits and pieces for dairy cows, bits and pieces for heavy males in Europe and not much else for us to report. Prices for cows were a fraction lower in US dollars and the same applies to the selling prices for males into the regular European customer base. If any of the rumours of private deals at low levels are true, we have still to verify them. Rumours are plenty and facts very few.
The kill: Falling beef prices and retail have reduced slaughter by quite a bit this week, but we think that numbers are going to resume because cattle supply is sufficient.
What we expect: We will have to wait to see if tanners believe that prices have declined enough to replenish inventory. We can’t see this for some weeks to come so one has to be prepared for more price erosion in the coming week. Fortunately no panic can be seen and might allow prices to retreat further in an orderly and controlled way.
| 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 | € 2,35 |
Weakening |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 2,10 |
Steady |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 2,30 |
Weakening |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 2.00 |
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 | € 2,25 |
Weakening |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 2,25 |
Weakening |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 2,05 |
Weakening |
|
| 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 | € 1,75 |
Steady |
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