German Perspective - 19.12.17
19/12/2017
For most companies in this part of the world the end of December is also the end of the fiscal year. This means everyone is busy preparing whatever can be prepared for this date. For general business, this means that the kill continues and the processing of hides still has to be organised every day.
Most beamhouses will shut in the middle of this week and this means the supply of all regular fresh hides will be interrupted until the reopening in 2018. The good news is that many of the European tanneries will be opening at the beginning of January; only a few in the southern parts of the continent have decided to wait until January 8 to restart. As a result, the interruption to the fresh hide flow is easier to manage than in previous years.
New business is currently limited to discussion about renewed contracts for the supply of hides from mid-January onwards. This is only in the cases when this hadn’t already been agreed.
The high kill to feed the supply chain for the holiday season has created a reasonable surplus of hides in the market and this has been reflected by quite a bit of pressure on prices in the past few weeks. The kill now begins to fade, but we think the numbers will remain pretty reasonable until the end of the year.
The holidays do not interrupt the working week this year, which makes planning significantly easier than usual. As a result, the focus in Europe last week was on the interest from Asian customers. In our case, we could only trace limited bits and pieces of business. Prices from various origins in Europe are bouncing all over the place. This does not create much confidence on the customer side and this is reflected in the reducer number of bids. These were generally around the lowest level the tanners in Asia see, which are lower than what we ask.
Under such market conditions, one would have expected a serious drop in abattoir prices, but there is always one who believes themselves smarter than the rest. The consequences can be seen in rumours that a central European hide processer is facing financial difficulties at the moment.
The different market view and the different position of hide suppliers from various European countries is currently dominating the market. As already mentioned, there are huge price spreads between hides of similar qualities from different origins. We all know that such a situation cannot be sustained for very long. This means either the expensive has to come down, or the cheap has to go up.
In any case, nothing will happen until the New Year, most likely not before mid-January. What could shake, rattle and roll the market? Perhaps massive interest and a purchasing wave from Asia over the holiday season, but that seems unlikely to happen at the moment.
As far as business last week was concerned, only a few isolated sales were possible after long discussions about price. The best was steady money, but in most cases moderate reductions remained unanswered. There was no specific interest for any kind of hide, but it seems those buying are looking for better and guaranteed quality. This is not a surprise considering how difficult the sale of cheap leather is and how poor the prices are in the market today.
The kill: As far as the kill is concerned we have to assume that the peak is finally behind us. Cold stores for the season are well filled and supermarkets seem to have made their plans as well. Consequently, numbers will now decrease to normal seasonal levels, which might not be bad news. Weights continue to run pretty high, in particular for the male section.
What we expect: For the last week before the Christmas break we know there will be no activity in Europe. We feel that not much is going to happen in Asia either. Tanners in Asia will now check their requirements for the Chinese New Year and will certainly look at what kind of bargains can be found among the desperate sellers. Prices are unlikely to change much.
| 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 |
Stable |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1.30 |
Weak |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 1.50 |
Weak |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,20 |
Weakish | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,15 |
Weakish | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,75 |
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 |
Steady. |
|
| 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 | € 1.10 |
Steady |
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