German Perspective - 12.07.16
12/07/2016
For European suppliers, the month of July is becoming overseas customers’ visiting month. The weather is nice, business at home is reasonably slow and so everybody is jumping on a plane and travelling, some to Europe, some to the US, but without question we haven’t seen as many visitors for a long time as in the past three to four weeks, and many more will come before the end of the month. What is generally considered to be a good sign and an indication of interest has become more about holiday-making and enjoying a short period of escape from home rather than serious business travel. Anyway, this is part of the game and so is a question of entertaining rather than a chance for doing serious business. We cannot really see much interest in hides. Successful and busy tanners are managing their summer quarter, but we cannot really determine any concern about raw material supply or planning for a longer timeframe than after the summer holidays.
Possibly the general uncertainty created by Brexit and continuing violence all over the world are part of the reason for the current mood. The weak sterling and the unclear situation over what Brexit is going to mean for the economy in the UK, Europe and possibly the world is affecting the thinking of many companies. Many industries believe that business and budgets for the UK market have to be revised now as a consequence of the currency situation.
We remain in a situation in which quality leather producers continue to be quite busy and have made their raw material arrangements already. Others, in particular Chinese cowhide tanners, are still completely on the sidelines, at least as far as Europe is concerned. Apart from their lack of interest, environmental and cash-flow issues are weighing on business in that part of the world. The downturn of the industry in China continues and it doesn’t seem that this is going to change soon. Also in China, the high-end, quality manufacturers, automotive and large shoe tanners are the only ones that are reasonably busy while the rest of the industry remains in a pretty deep structural crisis.
Sales this past week remained under par. It is never ‘nothing’, and there were bits and pieces scattered around, but interest and sales are not convincing enough to believe that there can be much optimism for the leather industry for the rest of this year. Prices were just about stable with a weaker feeling on cows and stable conditions for males. Considering the price levels in the US it remains strange that the general demand for heifers from Asia continues to be far less than one would expect with the price spread we have at the moment.
The kill: The kill is also switching to holiday mode. The school holidays have started in the most populated regions of the country and over the next weeks the remaining regions will follow. As usual the kill will fall to the lowest levels of the year from mid-July to the end of August. It also remains to be seen what the consequences there will be for slaughter from the low milk prices and if the anti-beef campaigns can make further impact on beef consumption. Weights have reached their seasonal lows.
What we expect: All activity is going to be focused on overseas markets, with Europe almost totally closed for the coming weeks. Prices might not change much with nobody likely to adjust until the All China Leather Exhibition in Shanghai (August 31-September 2).
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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