German Perspective - 09.08.16
09/08/2016
Business and market activity is of course never zero and so also at the moment with modern technology and some emergency staff in the offices a minimum level of attendance and activity is maintained. Most of the incoming messages are totally negative and whatever is mentioned it always has to do with lower prices. In particular in China, tanners are trying to bottom fish and continue to spread very negative information about the market situation. This applies not only to demand, but every second sentence is mentioning their need for lower leather prices and consequently lower raw material prices.
We have been hearing such stories since the beginning of the year and nobody can really ignore the fact that prices are indeed retreating, but actually we think it’s fair to say it has not really triggered any additional demand and the stories the major production centres continue to distribute are pretty much the same as we heard several month ago.
Yes, there are the positive sectors in the leather business too and for European hides suppliers it might even cover a reasonable part of production, but in general one cannot really say the demand for leather and raw material is satisfying. The second quarter is usually the slowest of the year and certainly we will see some improvement in production and demand after the summer break. The question is just if this is going to cover also the medium-lower end of the quality range. Possibly it will, if tanners are right to forecast better demand for leather when the finished leather articles are agreed with the customers and a compromise on ideas of quality and price has been found.
For the time being at least we find it difficult to trace any reliable indication of what is actually going to happen between the big brands, the retailers and manufacturers along the pipeline from raw material to finished leather. One can only hope that with the extremely negative conditions we have seen in many sectors inventories have been run down by so much that a strong round of replenishment is required as soon as a clear picture about leather demand and related articles is achieved. This is however pretty unlikely to happen in the next few weeks and it might take us until the end of September for everything to be known. The first indication about what people are planning and what the position in the industry really might come at the All China Leather Exhibition in Shanghai at the end of this month.
Business this week has been pretty slow again with Europeans on holiday and the Chinese basically bidding so low that a serious negotiation about sales was not possible. As a consequence we might have seen one of the lowest weekly sales numbers of the entire year.
The kill: What applies to the leather market can easily be transferred to the beef market too. With most of the consumers being on holiday and traditionally quite a good number of them travelling abroad, the demand for beef is exceptionally slow. Also slaughterhouses are not working in full and so the number of incoming hides is also at the lowest level of the year, except for Christmas of course. For the next three weeks we don’t expect any change.
What we expect: For the next two weeks we might see some Asian customers trying to put more pressure on the market and to find bargains. Other than that we would be surprised to see any market activity in the next two weeks.
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 |
Weakish |
|
| 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 |
Weakish |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.30 |
Steady |
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