German Perspective - 24.05.16
24/05/2016
That they are not yet fully convinced that the market has bottomed could be seen by the fact that they were pretty strict on the volumes and were only buying premium types. There was no way to convince them to take packages that included some of the lighter material too. The majority of buyers were bidding far below the market level and were not willing to discuss anything realistic. Not taking the (unacceptable) bids meant buyers just walked away and said they would wait. So, there was very little business done in the end, but certainly better than nothing.
The small round of sales this week has once again triggered discussion on whether the market has reached bottom. It’s very difficult to judge because interest is still too small and selective to make us believe in a better market. There are too many rumours of very cheap sales around and not enough time to check what is really true. Things will only really improve when the ‘me too’ factor comes into play and buyers become afraid of missing the boat. At the moment there are still too many hides around in need of a buyer and the number of suppliers willing to take a firm position might not be big enough. It is also a timing issue and also a question of the next steps of the ‘purchasing syndicate’ in the north of China.
We are only at the end of May and this means that the real low season is still well in front of us, although Chinese tanners need to replenish with shipments beginning in July. However, leather demand hasn’t picked up yet and the prices for leather contracts for the second half of the year are still unknown. Without more information on volume and prices it is a difficult task for buyers to decide on larger volumes, so most of the business is now driven by the fact that prices for dairy cows are down by more than $10 per piece since first quarter of this year; it might be better to secure a bit of material with this correction.
In Europe business was pretty quiet. We don’t need to repeat that the premium and heavy hides are still moving and benefitting from lower seasonal kills. Outside this group of buyers there is little activity. A bit of a worry is the suggestion that there are already a number of payment problems beginning to arise. Some smaller suspensions have been noted already, but there is talk it could even hit some larger accounts, in particular in southern Europe. It could be a long, hot summer.
The kill: The kill is steady with low numbers of males still. There is plenty of grass but beef business is not good at all. Low milk prices have become a serious risk to farmers; it is still not clear how they are going to deal with this in terms of production. They may cut production and reduce their herds or wait and see.
What we expect: We are very interested to see what happens this week. Was the little round of interest only a flash in the pan or will it be confirmed by more interest this week? It seems that Chinese tanners are able still to wait and have clear targets for prices. If the price impasse can be broken and follow-up sales can be booked we might see a plateau for a while; otherwise the wrestling will continue.
| 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 | € 1.80 |
Weak |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 1.70 |
Weak |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,50 |
Weak | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,45 |
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 | € 1.90 |
Steady |
|
| 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 |
Share this story:
