German Perspective - 16.08.16
16/08/2016
The stubborn optimists in the industry point to rising wealth and global growth in spending on consumer products. They see a fundamental shortage of raw material and view price corrections as temporary. The trend is still intact in their opinion and one just has to be patient, nothing else. It is a position and it is the one taken mainly by the same people who favoured market analysis that predicted a further rise in prices when they had reached record levels. Price forecasts and leather demand until 2023 were made and the only way was up. A lot of this has been wiped away in the past year or so.
Leather has its place. It is a beautiful product if made well, but it is not a material that sells just on its own image and quality. Lower-quality leather can be easily substituted. We have to be fair: if you finish the product to the very limit of the technological possibility you just kill it. The copy material is polyurethane and it frequently looks similar to leather. Do consumers recognise the difference? Do they bother about the original? No. Is leather cheaper? No. So, why is the beef industry still so optimistic about the value of its raw material? It’s wishful thinking, unless you need access to high-quality raw material for luxury products.
The best examples can still be found in the ovine market where the spread between the disposal of some skins (pretty common these days) and the still very reasonable prices for others (owing to demand from luxury brands) is wider than ever in history.
All sellers around the globe are sticking to their prices and everyone, buyer and seller, is now waiting for the next leather shows. Sellers hope for a great wave of interest and sales and buyers hope for scared sellers with unsold stocks willing to offer ‘special deals’, which would make their existing leather orders profitable and give them the chance to discuss new prices for leather for the new season.
Sales in the past week were once again just restricted to the specialties. Low grades, lights and special selections were the only items clients from overseas expressed any interest in. The bread-and-butter types were ignored because of holidays in Europe, and most likely, because buyers in Asia are waiting for the All China Leather Exhibition in Shanghai at the end of August and visits from their suppliers.
The kill: There is no news from beef production. In the peak holiday season the kill is low and this is nothing new. It should slowly begin to recover next week and later in September we should learn how farmers are going to deal with the low price of milk. Retail prices for beef have also fallen in the past months.
What we expect: Reports from overseas still speak about decent hide sales. So it seems that it is just Europe that is suffering from subdued interest. If interest for raw material is really better it should spill into Europe as well in Shanghai. That would be nice, but at this moment there are few signs of it.
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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