German Perspective - 08.11.16
08/11/2016
On the positive side we have a better-performing market for furniture in almost all markets and the start of the production of next winter’s shoe season in January.
For the moment it seems that the presidential elections in the US are having a significant impact on the markets. The oil price has fallen quite a bit and all this has created a new balance of valuation for leather and hides and skins. Anyway, while the previous weeks showed something like normal sales activity, this week was almost totally quiet again. This may be due to a tanners’ meeting in China, or to the elections, or to currency issues or simply because the pipeline and inventories have been sufficiently refilled over the past few weeks.
It seems that most decisions are made and contracts done and finally the tanning industry is concentrating on production. In Asia production seems in better shape than in Europe. The situation in Italy is still worrying. From northern Italy the reports are still somewhat negative and activity is said to be quite slow. Many say that this is still linked to problems with effluent treatment while others think this is only an excuse for a lack of of orders. However, the news from Tuscany is not much better and there they do not have the same issue with water treatment.
Some of the high-end niche producers continue to run quite well and continue to be as busy as they have been. This is confirmed by the sales performance of the majority of luxury brands over recent weeks. If their Christmas sales are reasonable this sector, which is setting trends and is able to promote materials, could be the trigger to help general leather consumption back to its feet.
Where is mostly urgently required is for the garment sector to stop wasting so many skins, which even at record low prices are failing to generate enough interest among consumer product manufacturers. Supply is already reduced with a rising number of skins being dumped, but still not enough to get this segment back on track.
As mentioned above, general interest last week was pretty quiet. Fundamentally we would say that demand is still pretty much the same. Asian tanners would buy more heavy dairy cows, but are still not attracted by the available males. Low grades can only be sold at discounts and in Europe the standard demand for bulls can easily be met with the increased slaughter. So, the imbalance between supply and demand of the different grades and weights in the market persists.
The kill: The kill remains pretty decent. A holiday in many parts of the country on November 1 for All Saints Day has curtailed supply, but numbers are still sufficient. Milk prices continue to climb and the cull kill of dairy cows is showing its effect. The cold nights will bring good numbers to the market and this should remain for a while.
What we expect: We do not share the enthusiasm some are displaying after the rise in activity in October. Packers are already pushing hard for prices, but in view of the leather prices and the fragile leather demand it would not be a good idea to bet on a healthy situation as a justification for higher price levels. Now we wait for the US elections and the likely impact on currency rates.
| 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 | € 1.50 |
Steady |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 1.70 |
Steady |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,40 |
Steady | |
|
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 | € 1,20 |
Steady |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.25 |
Steady |
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