German Perspective - 03.11.15
03/11/2015
If one just looks at the local conditions one could not be blamed for being far more relaxed than in September. Although also this statement has to be divided. Due to the rising interest in cows and the return of buyers from Hebei province, the summer decline of prices has been halted and the pressure has been lifted from the market. The situation for bulls is a bit different; here the market never corrected to the same extent as the market for cows owing to strong demand from the automotive sector. However, this has actually caused a problem because German bulls are now outside this sector and in terms of the international market ranges have become very expensive and very difficult to sell outside a small circle of EU buyers who cannot take all of them.
We have to admit that we also don’t like the big difference in prices in the marketplace today. If you just compare all the different prices from the various markets and aggregate the prices of raw materials that could possibly substitute each other, then trace price spreads that cannot be justified by quality difference. It is fair to say that the trade between the ‘quality tanners’ and the ‘quality suppliers’ has been normal and regular over the past two month, which means that the quality suppliers are well sold and do not feel the market pressure on prices as much.
On the other side of the equation there are still very good volumes of hides that are still sitting in warehouses that for various reasons have not been sold and are still looking desperately for buyers. This applies mainly to the lower-end and less regular origins that are traditionally sought and bought when leather demand is high and the premium sources are outsold. Consequently we are now getting closer to the junction we expected for the end of October where the market has to show if overall leather demand for the next months will allow extra volumes to be absorbed and stocks to be cleared, or if the business will just remain limited to the selected supply chains of a certain quality level of material, buyers and sellers. Everything points in the direction of this being decided in the coming weeks.
Generally not much changed this past week. Interest was much less than in the week before, but with a bit of ambition sales could be booked. Bulls in Europe are finding headwinds. On one side the tanners need their regular supply but it is tough to escape from the fact that leather prices are down and these hides are expensive. We consider the female market to be very steady and the male market to be in need of price adjustments.
The kill: There is little in the traditional seasons to go by any more. The kill has not reached the levels we were used to seeing at this time of the year, but numbers are stable and regular. Weights are moderately climbing.
What we expect: From the market as such we don’t expect any changes. Moves could only derive from speculation. After the market decline has faded there might be some who would like to push prices higher as sellers generally prefer firmer markets. We would consider this a dangerous game because the fundamentals haven’t changed and it could end where all these attempts have ended in the last six months. Stability with downside adjustments on males would be much better now.
| 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 | € 2,30 |
Steady |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 2.00 |
Steady |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 1.90 |
Steady |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,60 |
Steady | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,55 |
Steady | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 2,00 |
Weak |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.95 |
Weakish |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.85 |
Weakish |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1,35 |
Soft |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.45 |
Soft |
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