German Perspective - 21.07.15
21/07/2015
It seems that many people have had this thought and we experienced the first week in a long time that could be described as active. Not all the enquiries were serious, but at least some e-mails and phone calls came in to discuss business. In particular Asian buyers were keen to test the water and to check how desperate sellers might be to move some product. Very ambitious bids were received and in the end very little could be converted into business and in the end very little was sold. However, considering the glass to be half full we appreciate the volume of interest because it confirms that tanners are still there and are thinking about their business future.
This, did not seem to be purchasing against leather orders, but rather more just to take some interest in the current lower prices, just in case. The main problem is that most tanners are still not clear about their volume of orders and prices for the coming season. Everybody is talking today about the critical attitudes of tanners with regard to older, higher-priced contracts, but we also hear frequently about leather buyers asking for price concessions and discounts on existing contracts as well as on already calculated price levels for articles in the development phase. This is quite difficult for many tanners now, because they are missing an anchor for their price calculations and an idea of what they should and could pay for their raw material.
This does not take into account uncertainties about order volumes or split credit for the rest of the year. This makes it so difficult for tanners who are not running on safe, long-term contracts with their customers. For many, a lot of attractive raw material prices are being offered, but nobody knows if they are really attractive or just seem attractive because prices have been so unattractive and unprofitable in the recent past.
Another subject that is scaring potential buyers at the moment is the huge spread of prices one can see between similar products from different suppliers. Everyone has an explanation to offer, but when one compares offer lists today price differences of more than 10% and sometimes even 20% are not uncommon. Whatever the story behind this, it is definitely not trust-building at the moment. Tanners are basing their actual price ideas at the bottom end of the range.
We are still missing ‘a level’ around which the various prices can circulate according to their quality and reputation. With the present market situation, there is very little interest above the lowest price levels. We feel that the bottom end of the range could be called a temporary summer plateau because at these levels serious interest can be seen. Sales during the week were a bit better than in the weeks before, which means that volumes are still low but at least something was moving. Some cows to Asia, some ox and heifers and a few loads of bull hides and low grades. Nothing to cheer about, but with the weaker euro, it was at least better than we feared at the start of the week. Prices were again somewhat lower with the only exception being extra-heavy bull hides.
The kill: The beef business is dreadful and so is the kill. This summer the kill is worse than ever before. There is no local consumption, no export, simply nothing and one would not be surprised if this remains the case well into autumn. Weights are extremely low as well.
What we expect: With the bottom range of the price quotes this past week one could possibly believe in a ‘market level’ that could be the base until the end of the summer season. This would however mean that the price ideas of many sellers would still have to be corrected by another 10%-20% and many are still very reluctant to consider this. Those who have already bitten the bullet may be able to depart for their summer vacations with sufficient order books.
| 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 | € n.a. |
Soft |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 2.00 |
Soft |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ n.a. |
Weaker |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,90 |
Weaker | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,70 |
Weaker | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € n.a. |
Weaker |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 2,10 |
Soft |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 2,00 |
Steady |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1,55 |
Soft |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € n.a. |
Soft |
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