German Perspective - 04.04.17
04/04/2017
When we said above that most people returned from the show with a good deal of satisfaction, this is mainly related to premium leather makers. Such a statement is normally immediately turned into a firmer hide market and the expectations that raw material prices will go higher in the second quarter. In this case, however, the price trend during the show was down rather than up.
How does this tally? Well, for quite some time now hide prices have been at unworkable levels accepting the fact that leather prices remain pretty much unchanged. Hardly anyone is able to raise leather prices at the moment or is expecting to in the foreseeable future. This applies even for the leather types that still enjoy strong demand. In particular the upholstery tanners in northern China have figured out that the price levels reached no longer match leather prices. So far the cost-averaging effect with cheaper contracts from 2016 has provided a balance, but at present prices this has become pretty difficult. For the sellers it is difficult as well because the present sharp increase in transportation costs is weighing hard on calculations.
On day two, after sniffing around, tanners began to test the waters and were quite aggressive in their ideas. Bids that were around $3-$5 dollars below the last traded levels were pretty common. We do not think that many suppliers were willing to consider such levels, in particular given that in many countries in Europe abattoir prices have gone out of control in recent months. Being forced to find compensation for the higher transportation costs, much lower selling prices on top were not really an option.
We would consequently not expect that a lot of business was booked, despite the fact that several buyers were willing to adjust their bids on the upside (but not to levels that were really attractive). It seems that many preferred to put negotiations on hold and to travel home first to see how the abattoir prices can be handled before taking any binding decision for the coming months.
Better-quality hide types were more successful and sometimes it is necessary to create packages to make sure that all hide types are moving. Otherwise cherry-picking has become common. The total number of sold hides was pretty limited in the end and the mood was better than the sales results at the fair would suggest. It will be quite interesting now to see how the abattoir market reacts and what the follow-up from clients this coming week is going to be.
The kill: We have had a foretaste of summer. The grass will now grow fast and if temperatures hold cattle will move out quickly. So far the kill has been in keeping with seasonal numbers. With Easter now just around the corner (April 16) numbers should decline a bit.
What do we expect: The market is now looking for a new level and for cows and low grades it is only a question of how much lower prices can go. Bulls will continue to trade within a narrow range. It might take a little while until it is all sorted out and the correlations between origins and the various types are working again.
| 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 |
Weakish |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,50 |
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 |
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 |
Weakish |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.25 |
Steady |
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