German Perspective - 31.03.15
31/03/2015
On the one hand, you have those who say they have seen empty warehouses and who predict a big need to buy in the coming weeks or months, and you have others who have seen huge stocks of unsold splits, reduced leather demand and massive margin problems. Hardly anyone has found a clear answer about what this is going to mean for the market.
As a consequence trading activity was barely steady, which is actually good news because if things were totally bad, the last thing tanners would do is buy before APLF. General opinion and experience of the past years has been that prices decline after March then go up again, and this would normally keep the buyers out of the market to wait for cheaper prices at the end of April. However, it is still pretty difficult to get a clear picture about the real volume of sales and to know if everyone has been successful enough to move the quantities desired at the prices planned.
Sitting at the desks of tanners and meeting colleagues during the trip has given a clear indication that prices have barely moved over the past weeks. Anyone who wanted or needed to buy had to pay approximately asking levels and the variations around the prices paid compared to three weeks ago was very limited. Considering that the US dollar has lost between 2% and 3% of its value in the same period, one can say that the revenues in euro have been moderately declining. However, market volatility remains very low and a real step in either direction seems unlikely. It is also fair to say that if there have been any price adjustments they were moderately on the downside we haven’t seen details anywhere of any price that was higher than a few weeks ago.
There is still no clear picture of leather demand and of orders in the tanning industry. It can’t be as bad as some are saying but it’s definitely not as good as it should be and, considering that in some of the main beef producing origins the kill is pretty much down without having any real positive effect on prices, one has to assume that leather demand has come down by about the same percentage as hide supply.
There is still a wide gap between the various raw materials suitable for leather production. Cattle hides are the ones that have barely corrected from the record levels we saw a year ago, while splits and some sheep materials have seriously plunged and are far below the levels of the first half of 2014. What was at one time of importance to product manufacturers seems to have lost its meaning.
Selling activity was moderate this week, with bits and pieces of all kinds of materials selling at pretty steady price levels. Nobody was rushing, but we still see a certain price advantage versus other origins and this often gives us the first opportunity to come to a sale. Clearly noticeable is the fact that there is rising demand for cheaper categories of material and that sales of the more expensive ones only take place where they cannot be avoided.
The kill: The kill is in the typical pre-Easter mode with slaughter numbers on the low side. One can barely feel any influence of the end of the milk quota and opinion that this would temporarily increase cow slaughter was obviously wrong.
What we expect: We have reduced our expectations by quite a bit for this coming week. As the market situation has developed, it does not seem that anyone is willing to change the positions they have taken. Seller will stick to their price ideas and buyers will just pick around the edges and buy what they need to cover incoming leather orders. This should be the case even during APLF; it would need a real external trigger to move prices by much.
| 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 |
Steady |
| 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 |
€ 2,40 |
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 |
€ 1,90 |
Steady | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 2,25 |
Steady |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 2,20 |
Steady |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 2,05 |
Steady |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1,80 |
Steady |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1,80 |
Steady |
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