German Perspective - 31.10.17
31/10/2017
The former continues to sell quite well and there are enough customers to cover the current kill, which is clearing most of the production on a pretty stable and steady basis. One can certainly discuss if prices are sufficient in view of the inflated abattoir prices, but at least those hides are not piling up after failing to find an adequate customer.
For the other sort of material, which is predominantly the type of hide that has been successfully marketed for years in Asia (more specifically in China), the situation is quite different. The standard reply from agents and customers is: Sorry, your hides are too expensive compared to other options. There are a few other excuses, but the consequence is always the same with selling quite problematic or at totally inadequate price ranges.
This problem has been developing for quite a long time as a result of hide prices in many parts of Europe not adjusting to changes in international trends and currency exchange rates. Generally, it is a problem of abattoir prices because the quality and type of hides that European slaughterhouses are producing are still appreciated. They could quite easily be sold if the price were more competitive.
The prices of most slaughterhouses are correlated to the prices of the ‘hot pancakes’ of the market and this has been the case for too long. In most regions, the abattoir prices are still based on males and females with average weights, which are estimated according to experience. The price of the males is mainly hooked to the privileged heavy and high-quality hides that end of up with automotive tanners.
Abattoirs simply do not recognise that the spread between the different hide types, between male and female as well as heavy and light, has widened significantly to reflect leather business and demand. This means the average hide prices in Europe have not adjusted accordingly. The price front is now beginning to crumble in certain places.
In order to return to something like a regular kind of trading, it will be necessary to push back to international competitive levels. For slaughterhouse prices this means there needs to be a fair and acceptable compromise on the prices of different materials according to weight, sex, quality and average price. This must reflect the marketing and sales of 100% of production rather than just part of it.
Business and sales this week reflected the above. Sales in Europe to the strong and high-quality leather makers remain pretty stable with just-in-time deliveries. In most cases, there was a need to renew programmes at moderately adjusted prices on a regular quantity level. Asia was again pretty quiet. A handful of bids were seen in the first half of the week, but they were far too aggressive to be considered in our case. We heard about some business being done here and there, mainly by suppliers that needed to finally unload some of their inventory.
A little bit of assistance came from the currency market on Thursday afternoon when the US dollar was lifted somewhat against the Euro. We would say that it was once again a week that saw a good clearance of the high-quality and heavy material but the same struggle for hides that generally find their homes in Asia.
The kill: The kill is decent with numbers and weights at normal seasonal levels. Anything other than pretty much the same in the coming weeks would be a surprise.
What we expect: Every week we wait for the breakthrough in demand and the long-expected round of sales to Asia to clean up the market. As long as this doesn’t happen we will continue to work week to week and take care of the good and active tanners here in Europe. There is no reason to believe that anything will change this week.
| 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 |
Weakish |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1.45 |
Weak |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 1.60 |
Weak |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,35 |
Steady | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,25 |
Steady | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,80 |
Weak |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.75 |
Steady |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.70 |
Weakish |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1,00 |
Weakish |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.20 |
Steady |
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