German Perspective - 05.07.16
05/07/2016
The leather business seems not too active, which again is no surprise at this time of the year. July and August never seem to bring much news, and it seems this will continue in 2016. Everyone can now focus on the final matches of the European football championship and, after that, on the Rio Olympics.
The main general concern for the rest of the year is related now to the potential consequences for the UK economy of its exit from the European Union and, more broadly, the impact that the fear of terrorist attacks might have on international travel. A lot of the dust has settled already after the UK referendum. Stock markets have recovered and only the value of sterling is down, which for the moment might even be beneficial. Russia has eased some of the sanctions against Turkey and if this converted into more travel and tourism it might even help the leather industry in Turkey a bit. After the recent terrorist attack at Istanbul airport, one has to see first if more travellers from Russia will enter the country and, if so, if this is followed by more business for the leather industry.
Overseas the interest in EU raw materials has dried up completely. The flurry of interest that we saw a few weeks ago and that brought at last some sales ox heifers and dairy cows has almost completely dried up again. Every week, like the one just past, when the US export sales figures are published you have to rub your eyes, in particular at the prices quoted. US hides look quite expensive today and in the real world tanners do not spend any money that they do not have to spend. So, the only options are that either the public prices are not correct, that buyers in their industrial set-up are even more inflexible when it comes to their raw material resources, or that the time cannot be too far away when EU hides have to become an option for Asian buyers again.
It is true that hides from the EU, mostly cows, are being sold in Asia, while the heavy males stay at home to make heavy side leather and to supply automotive tanners. It is also true that dairy cows and heifers from Europe are mainly reaching the smaller and less sophisticated manufacturers, but if price is such an important factor in the industry these days the big gap in prices between categories cannot be ignored; one day the gap will be closed. For the moment however, the interest from Asia remains pretty dull and from week to week one is waiting for the next round of purchasing in particular from China.
In the meantime we have to wait and to find alternative outlets for the material, and bits and pieces are finding their way to South East Asia or the Middle East. In particular companies in the Middle East claim to be receiving more leather and shoe orders from brands that traditionally went to China.
Sales this week were again rather patchy and no big volumes were generated. Thanks to regular buyers there is always something and the regular programmes are taking most of the pressure away, but these sales are not enough, nor are they consistent across all weights and categories. In particular lighter weights are finding most of the resistance. With the help of the currency market, most sales brought almost stable returns on a euro basis.
The kill: Wet and reasonably warm weather is almost perfect for grass. Farmers see enough grass for now and later and are not desperate to move any cattle until the price is right. Anti-beef and meat campaigns are now being run by the German government and so beef consumption at present is not really satisfactory. Holidays lie ahead and so we expect at least six or eight weeks of low slaughter.
What we expect: Not much again for the short term. In Europe we are moving into the holidays and the Chinese may just want to wait and see if they can find some easy victims who might need to sell. In the meantime abattoir prices have to reduce first.
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 |
Weakish | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,40 |
Weakish | |
| 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 |
Steady |
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