German Perspective - 29.03.16
29/03/2016
Several people are expecting a shift to higher-substance, higher-quality leathers, but there seems to be very little substance to this opinion so far and only the automotive industry continues to demand these types of hides and remains forced to pay the price attached to this particular raw material. However, this covers only the heavy end of the range.
Lighter hides also need interest and consumption from side-leather productions, which presently face fierce problems on price and have shifted their interest and demand more towards lower-price material. This has slowly but surely reduced the demand for EU hides among Asian tanners. While the number of males is actually not too large, the situation for dairy cows and heifers is somewhat more complicated and the market has not found a real, sustainable price level for these. Many rumours about cheap material are swirling around the trade and have been for several weeks, but so far it seems that a number of the deals are just some of those ‘average down’ sales that aim to save older and more expensive contracts with cheaper prices to reach, on average, what people consider to be the present market levels. Where these real market levels for dairy cows are today remains unclear. Many sellers still pretend that they believe in levels way higher than what buyers are willing to consider today. However, behind the curtains it seems that a number of sales in private have been made in the past weeks to keep shipments moving and to avoid any interruption.
One should not forget that there was a pretty quiet period as far as sales were concerned starting at the end of January. This eroded even the positions of those who had the courage to sell well forward. Those who have forward positions at higher prices as well as those who are seeing their inventory rising are trying to hold the market as steady as possible for obvious reasons, but in the present market environment it would require a strong increase in leather demand, and specifically for leather from higher-quality origins to force tanners back into the the premium origins at premium prices.
In any case those who were predicting in January a strong performance of the upholstery market in northern China until April proved to be wrong The situation has created a stand-off between buyers and sellers and a big gap between what sellers need and want in terms of prices and what buyers were willing to pay. Everyone is waiting now for the APLF show in Hong Kong and for face-to-face meetings in Asia to see who blinks first. In about two or three weeks we will know.
In the meantime sales remain limited to either long-term programmes or to sales to those buyers who operate in the quality section and have to be sure about the product shipped. This still generates a low level of sales every week but the add-on volumes are missing. Total sales this week were again limited to a few regular buyers taking their preferred items. A bit of interest for some sideline items like calf and kips was also around, as well as some sales for sheep and lambs. Buyers seem to realise that at least for these items prices can barely go any lower.
The kill: With Easter, the kill was again on the low side. Weights are beginning to decline and the mix was once again favouring females. This coming week will be shortened too and beef business will continue to be less than what packers would like to see.
What we expect: By next week everyone will have formed an impression of the state of the market. After a long period of subdued business one should expect more movement in the weeks to come, at whatever prices. We don’t expect the leather business to be much better in the second quarter, but tanners have low inventories, which should be positive, at least as far as volume is concerned.
| 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 |
Weak |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1.85 |
Weak |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 1.90 |
Weak |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,60 |
Weak | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,55 |
Weak | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,95 |
Weak |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.95 |
Soft |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.85 |
Steady |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1,35 |
Weak |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.35 |
Soft |
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