German Perspective - 15.11.16 - leatherbiz: Lea Leatherbiz

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German Perspective - 15.11.16

15/11/2016
What happened this week: Time begins to fly. In the last quarter people begin to count the weeks until Christmas and the end of the calendar year and for many businesses the end of December is also the end of the fiscal year, which means that time is running out to change much in terms of the business results that have been achieved so far. At the same time the last quarter is also the beginning of the busy season in the leather industry, which means that the general day-to-day work keeps people quite busy. The slaughter in Europe is gaining pace and the numbers coming into the yards are increasing as well.

However, this week barely anyone was interested in the leather pipeline or in the hide market itself. The presidential elections in the United States were keeping people busy and they were also the major subject of business conversations as everyone tried to figure out if the changes in the biggest economy in the world will influence the leather business. Quite a number were surprised by the reaction of the currency and financial markets, which were supposed to collapse after a win for Mr Trump; in the end everyone had to learn that the world just continues because the markets took a far more relaxed position than most of the media expected.

Immediate influence on the hide market was pretty limited. Maybe most of the trade including tanners have not yet finished their analysis of what the election means and have put decisions on hold. Fundamentals have, however, changed a bit and this includes currency exchange rates, as well as several commodities. When we look at the most related commodity, which is the oil price, there has been a substantial decline in prices; for a barrel of oil we are looking now at levels of $40 per barrel again, rather than the level of $50 that we saw not too long ago. The US dollar has gained quite a bit of value and did pretty much the opposite of what most people were expecting in the  event of a Donald Trump win.

From the point of view of the general leather market this week there was not too much news except for the fact that it is becoming more evident every day that the dynamic in the automotive market is continuing to slow down and the general sentiment there has changed by quite a bit since the summer holidays. We are in a transition period in many parts of the world when we look at ‘mobility’ in general. The question of which engine is going to take us from A to B in 10 years is not yet clear and this means that in many countries family discussions over which kind of new car consumers should buy and when are on hold for the moment.

Weather conditions in our part of the world continue to be pretty poor with wet and cold days now for a while. Retail for apparel and shoes received a decent boost in recent weeks and this should have cleared quite a bit of existing stocks of winter shoes.

Trading this week was again pretty quiet and the only good news was, of course, the rise in the value of the US dollar, which made general calculations for exports a little bit easier. Most people still recall the flurry of interest in dairy cows several weeks ago, but there’s not been much follow-up business, at least not at the prices people think they should get today. There was only handful of deals done; most of the interest was just for dairy cows and low grades. Prices with the help of the currency rates continue to be reasonably steady, at least for the little volume done.

The kill:  The cold weather conditions continue to support the kill and the numbers have now reached the very high levels typical at this time of the year. Females and particular cows are dominating the slaughter mix and the percentage of heifers is well above the average of the past. With the weather forecast for the coming weeks, the numbers should stay high.

What do we expect: We expect another week of pretty stable levels and watch now with great interest to see if activity will rise again for all grades.

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 € 1.60
 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 € 1,25
 Steady
Thirds bulls 30/+ kg 38,0/40,0 kg 24/+ kg 33/36 kg € 1.25
 Steady


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