German Perspective - 10.01.17
10/01/2017
Activity from Asia was not much better and only towards the end of last week did emails with enquires begin to appear, the first since before the Christmas holidays. The enquiries were about good-quality heavy cows and maybe some heifers as an alternative. Why? Well, because there is the same demand as almost every year at this time of the season from the upholstery tanners with the only exception that this year the interest is even more focused than ever before on top-end female hides to make a good-grain, natural, heavy upholstery leather. You have to buy 100 hides to get 40 or 50 that hit the spot. The biggest problem is what the suppliers think about all this. In simple analysis, steady demand for hides when there is a lower kill, as there is in these first weeks of the new year, means a good market.
That might be true for a small part of the market but does not reflect the whole situation. Exactly a year ago the US dollar, market levels and expectations were pretty much the same as they are now but when the Chinese New Year break was over and temperatures were rising again not much was left from the excitement of January. In a firm market, demand for leather and prices will rise across the board and one hide type will be pushed by another. We are far away from that with the shoe business still lagging, low grades inspiring little interest and the demand for various hide types and article far away from being well balanced. We should not forget that in about 10 or 12 weeks the hot season of leather production will end and as much as many tanners might still need to fill some supply gaps, they will withdraw when the seasonal orders decline.
Then there is the oil price and the rising inflation. It’s not much yet, but we all know that higher oil prices and higher inflation have often been the basis for higher prices for hides and skins. What is missing now is a higher penetration of leather in the consumer product range and a turnaround in finished leather prices.
There are still plenty of raw materials that are at historical lows and so far we have not found any tanners, even those who have been busy buyers recently, who are able to pass higher raw material prices on to their customers.
Trading and sales have been light. Not just because interest was limited, but also because it is difficult to set asking prices without knowing where the abattoir prices will start in 2017. Cows can definitely obtain steady levels while low grades and males are not bringing much interest at asking prices at the moment.
The kill: The kill is now going into the seasonal decline. The year started slowly and most likely this will continue well into February.
What do we expect: We fail to find any real reason for a sustained higher valuation of raw material at this stage. Dairy cows have had their seasonal run, but there is no real room for any higher valuation, and who knows what speculative money will do. In the meantime the US dollar is weaker and selling prices are seeing strong resistance against higher levels.
| 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 |
Steady |
| 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 |
€ 1,45 |
Steady | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,40 |
Firmish | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,90 |
Steady |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.90 |
Steady |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.80 |
Weakish |
|
| 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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