German Perspective - 11.10.16
11/10/2016
The weather is changing now from the brilliant summer of September to a wet and more autumnal October, with quickly falling temperatures and the usual rain. This is normally good for the kill and also for shopping. Retailers were not too happy about the weather in September and were pretty afraid about losing another season, but now things are back to normal and it’s still early enough for things to turn round. From the leather market we did not receive any special news.
The impressions one could get from the Lineapelle fair in Milan are still valid. Tanners not working in the high end continue to struggle. Cheap raw material creates new technical challenges and some may not work out. All this changes the supply chain from raw material to finished leather. Customer-supplier relations change and additional complications arise.
The strong performance of the automotive sector was underlined by reports of strong sales of Mercedes-Benz and now everybody is asking if these positive trends for some brands can continue into 2017 with several markets already showing a slowdown. Despite the holiday in China several players are predicting a sustained demand for suitable raw material from the upholstery sector there and expect more interest after the break to replenish inventories.
Hides that do not fit into these strongly performing market sectors remain a problem. They are too expensive to run for standard articles and not special or good enough for the succesful niche markets. So far retail has not ‘rediscovered’ leather as an attractive material and so one can only hope that the rising price for oil begins to pave the way of a return for leather in the mainstream production of shoes, bags and other products. We want leather to be a hip product again, recognised in retail and by the consumer.
Sales this week were limited due to the absence of China. There was interest, but in the end only from buyers who were cherry-picking opportunities. They were possibly hoping for a weak victim in a difficult market. The interest remains focused on heavy and good-quality cows. Other than that only very cheap items sparked interest. In Europe sales were again focused on heavy bull hides and the total number of sales was below the average for recent weeks.
The kill: The kill was again higher. It is not as impressive as it sometimes is at this time of the year, but so far weather conditions have been very positive. Cow slaughter continues to dominate and the weights are still very low, which confirms that mainly older animals are being killed to reduce milk production. We expect this number to rise further and the same for males in the weeks to come.
What we expect: It’s difficult to imagine there being any strong trigger to shift the market trend in the coming weeks. It may require several weeks of high slaughter numbers to return to a renewed price pressure. It is difficult to find any convincing argument for a stronger market trend in the near future. Leather demand needs to rise.
| 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 | € 2,20 |
Weak |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1.55 |
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 |
€ 1,40 |
Stabilizing | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,35 |
Steady | |
| 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 | € 1.80 |
Steady |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1,10 |
Weak |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.25 |
Steady |
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