German Perspective - 13.06.17
13/06/2017
The mass markets for consumer products do not allow for any price increases. Despite a reduction in tanning capacity and the tensions of supply in India, supply remains abundant enough to cover leather demand for the time being. Split returns as well as productivity gains and selection tolerance are not helping calculations either. This means that for the remaining business there is a strict limit on raw material prices and sales have to be bought by discounts. This is hitting the EU only in part, because a good percentage of the hide production is still being used in the premium niches and so the pain is only felt in part. However, where the shelter from the niches doesn’t exist, business continues to be difficult. This was also the story of this week.
US suppliers were able to report decent sales in the USDA export statistics over the past weeks. A good number of buyers from Asia were sniffing around in Europe also, checking to see if they could find sellers who were willing to book business at the equivalent levels one can find in the US. With the prevailing prices at the abattoirs, though, these levels would make it impossible to make ends meet and despite all the interest tanners were not willing to raise their bids. Except for some very isolated exceptions, most of the interest was withdrawn or counters remained unanswered. So it might be fair to say that tanners in China need to replenish inventories, but can find enough offers and volumes around to pick the best and most favourable ones.
Despite the decent export sales from the US, prices are not rising there either and it seems that despite all the positive news a lot of grades and suppliers are still busy cleaning up inventory, trying to make sure that what is sold is also shipped instead of challenging the market with higher prices.
In Europe it seems that the situation is still a bit mixed and different from supplier to supplier and market to market. Some have done their homework in time and were able, in combination with lower slaughter, to keep their inventory under control. Others may have waited too long and are possibly also finding it difficult to get all the expensive contracts shipped so that they might have more stock than they feel is adequate for the time of the year. The European summer holidays are approaching very quickly at the moment and supplies and arrangements for the time from mid-July until the end of August are being discussed. This is not easy with almost all tanneries closed in the first three weeks of August and only very few options left to place fresh, chilled hides for tanning. The rest has to be salted and need to find a home too.
Sales this week were once again patchy. Very few trades could be closed and a lot of bids and interest could not be fulfilled. Bids are between $3 and $5 below the minimum needed. In Europe the market for premium fresh material continues to be supported by the low kill and so prices for these hides are entirely stable. We would call the prices for heavy males steady and for the other items difficult to quote due to the very limited amount of trading. We don’t think that the prices for the few sales that are taking place can be called representative of the market.
The kill: The kill has been a bit better this week because we had no public holidays. However, we are in the low season and with the start of the summer holiday season in the coming weeks the numbers will not be any higher.
What do we expect: Week after week passes and our market for cows, heifers and lightweight males does not adjust to the global price levels. Last year it took until September for the players to be willing to face the realities. Since the normal market rules do not apply at the abattoirs any more it is difficult to say when this correction is going to take place in 2017.
| 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 | € 1.85 |
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 |
Share this story:
