German Perspective - 07.06.16
07/06/2016
The very high export sales figures from the US this week will make no one think the market needs another adjustment for some grades. Quite the reverse; it might be taken again as a very positive sign for leather demand and production in the second half of the year. However, something remains wrong when only very selective items can be sold internationally despite the fact that many items from Europe do not look particularly expensive any more. This applies in particular to dairy cows, although negative news from the US labour market has sent the dollar down, making US dairy cow hides suddenly more attractive.
It is interesting some other markets are beginning to wake up. We still have the unanswered questions over where all the leather shoe production is going to go after it has left China. We consider substitution of leather as a very important factor in footwear, but the total demand is not shrinking in proportion to a decline in production in China. It seems that a lot of people have carried out production trials in the Middle East, and speaking to some major shoe producers in the region they are quite optimistic that some larger shoe orders could be placed there pretty soon. This would represent a logical cycle for the leather industry: the caravan always moves on when things become too expensive. People in the shoe industry and retail will definitely know much better than we do, but it’s very important to keep a close eye on the situation to understand what will happen next. If the industry is shifting again it will change the trade quite a bit because dealing with the Middle East is different from dealing with China.
In the meantime it is pretty clear that finance in China is the main issue today. There is barely a single agreed payment term being kept the way it was originally contracted. In the north of China the import agents and the payment terms have changed and it is not that money is not coming, it is just that it’s not coming from the facilities companies normally use. This is not particularly good news in regard to the financial stability of the region.
Selling and trading this week was again more piecemeal than regular. Clients, in particular in Asia, are still trying to pick around the edges and at the same time when the average weights in Europe are falling they want heavier material, in particular for dairy cows. Sales were made at almost steady prices, but the packages required in terms of weight could not be handled.
The kill: We see stable, but reasonably low kills and it seems that farmers will only decide on the next steps after they know what kind of decisions are going to be taken to help them with the present problems of the low milk prices.
What we expect: We still fail to see what can actually trigger a move in official price ranges. Sellers will stick to their price-tags and buyers will just take what they really need and select carefully what they buy. This will not clean up the entire production, perhaps the real value of each material will come to be noticed again.
| 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 |
€ 1,45 |
Weak | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,40 |
Weak | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,90 |
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 |
Steady |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.30 |
Soft |
Share this story:
