German Perspective - 03.05.16
03/05/2016
Leather demand for volume production is declining, so prices for these leathers are falling or are under serious pressure. Chinese tanners in particular face serious cash-flow issues in combination with a seasonal decline in business and production, from already reduced levels. The May holiday week in China and the sufficient stocks tanners had after the arrival of hides purchased at the end of 2015 and January 2016 is not really supporting any market activity at the moment. The biggest problem is, however, the huge spread between what suppliers ask and what tanners feel they can spend in view of orders and leather prices.
The month of May is rarely a good month for the stock markets of for hides. Temperatures in the northern hemisphere are rising and there are plenty of holidays, so regular production is cut and consumers spend less on classical consumer products. This situation is basically repeating itself almost every year. This year we have additional problems. With the wide gap between asking prices and bidding prices, combined with low expectations about a general market improvement, more and more rumours are swirling around the trade about larger cancellations in China for sales made prior to the APLF fair in Hong Kong at the end of March. Nobody except the parties involved will know if these stories are true or not, but if they are history would be repeating itself here.
A year ago, despite a much higher price level, it was pretty much the same and we all remember the comments made about business morals and sanctions that should be implemented. As usual, the trade returned quickly to ‘business as usual’. Even if the stories are not true, big volumes are beginning to populate the offer lists from Europe and that is not making a good impression on customers. Buyers in Asia are obsessed with not paying more than others in a falling market and large volumes of offers make them even more scared about taking decisions. It is true, however, that the longer tanners wait in the hope of buying raw material more cheaply, the closer they get to the day when they have to replenish. This is what many suppliers hope for and for sure it will happen. However, will this change anything in the fundamental balance between supply and demand at the moment and for the summer? We don’t think so; it might just bring temporary relief. We are still in search of a real balance between supply and demand for the standard articles.
Trading last week was light. European, heavy and good hides continue to run their own course. There was a bit more interest for light calf too, but that’s it. Price indications from Asia are so low that is is really difficult, if not impossible, to get to anything reliable.
The kill: The kill is dropping and just the extremely cold weather kept numbers higher. This week will be short and reduced. Weights are falling and we do not expect anything positive in the weeks to come.
What we expect: Next week will be quiet again. Asians are on holiday and we expect a long weekend, with many tanners closing on Wednesday. A common base for abattoir prices for May has to be found. Since prices have to drop substantially it will not be an easy task, but the market situation has also to be recognised by the beef industry eventually.
| 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 |
€ 1.80 |
Weak |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,55 |
Weak | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,50 |
Soft | |
| 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 | € 1,30 |
Weak |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.30 |
Soft |
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