German Perspective - 09.05.17
09/05/2017
This strategy has ended as it always does. Economics begin to reign and calculations to dominate; tanners begin to analyse carefully their positions. Being less forced and stressed to cover their raw material needs, raw material values fade into the background. With more time too study and less stress to feed productions, fewer orders and all the parameters in hand for the calculation, tanners analyse the raw material values and figure out what the best value for their money is. They come to conclusions and this leads, despite the general market trend, to widening value and price gaps between the various origins and hide types they can chose from.
In some cases it is pretty obvious, in others much less so, because the global public price lists do not always fully represent the realities. That makes it difficult for many today to get a secure feeling for prices and makes it difficult for buyers to commit to the next purchase. Psychology has a greater influence on decisions now. Things haven’t changed however: more you walk down the quality and price road, the more this factor plays a role.
The market continues to suffer, mainly due to the situation in China. Hide types that rely on this market are seeing price pressure mount or interest fade. Lack of business, rising cost of production, falling split prices and shut-downs due to environmental controls and restrictions have had an enormous negative effect on sales and hide consumption. The flow cannot be redirected so quickly, apart from the fact that this is also a reflection of a generally declining leather demand. Falling oil prices may also play a role in the present sentiment and add to the high levels of prudence one can sense at the moment. In terms of business one can hear more voices complaining about issues in regard to payments and letters of credit and some people have already asked for contract renegotiations.
As far as trading and sales are concerned it was once again one of those slow weeks. For Asia EU hides are too expensive at the moment and in Europe programmes are running and are only being renewed every four or six weeks. Day-to-day business is almost non-existent at the moment: there is not much to sell or to talk about for the time being. Sales have been coincidental and so were prices, with a weaker undertone all over.
The kill: The kill remains on the low side. Weather is cold and even in our regions one doesn’t yet see many cattle in the fields owing to the cold nights we are still facing. By the end of June cull programmes for cows will be ending and it will be interesting to see what this means in combination with rising milk prices. Numbers should remain low for some time.
What we expect: We don’t see much of a change yet. EU hide are too expensive for the international markets and have their market potential only in Europe now. Currency rates are also not doing any favours. Abattoir prices need mostly serious corrections to adapt to realistic market levels. Consequently, circumstances are not market-positive and sooner or later prices will have to adjust to get back to levels that are competitive and adequate globally.
| 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 |
Weakish |
|
|
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 |
€ 1,50 |
Weak | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,40 |
Weak | |
| 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 |
Steady |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1,20 |
Weak |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.25 |
Steady |
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