German Perspective - 22.05.18
22/05/2018
At the moment it is hard to see any light at the end of the tunnel. This is partly because of the season as well as the very fragile and unclear situation in the north of China. This means we have a hide market for full hides over 30 kilos, for selected types of heifers and, to a certain extent, also for extra-heavy cows. Nobody would disagree that, here, there is still some kind of regular market for which supply and demand meet up.
For lighter-weight cows, low grades and renderer hides the same can no longer be said. There are reports and discussions about renegotiated contracts, but it remains to be seen if they will be honoured and shipped. Some speak about adjustments of 20%-30% on the contracted prices, but it remains unclear if this is the result of a first, second or even third negotiation, or if it is a part of or the whole discount on the levels from around the time of APLF in Hong Kong in March.
We can only praise those partners who act correctly and honestly. If one looks at history, they are also the ones that survive. The good news is that every time a major renotiation of agreed contracts happens many of the ones causing the trouble disappear soon afterwards; they have no true business concept and the market does not need them and does not need to leave them a space to operate.
Trade this week was light again, with more offerings for the males at prices that are a fraction lower. The same applies to light heifers. Cows were just limited to the last remaining players in the market who want to replenish and make use of the cheaper hides around. The price pressure was eased by the firming US dollar, but this windfall effect could not totally compensate for the market headwinds.
The kill: The kills continues at seasonally light levels, light in numbers and lighter in weights with the seasonal decline now being in full swing. This week was once again shortened by a holiday on Monday. After that, only regional holidays will take place at the end of the month and then the weeks go back to normal for a while.
What we expect: The drama will not continue for ever and one day a good part of the Chinese industry will have to decide if it believes in a future or if it is just preparing for final shut-down. The next question centres on how suppliers around the globe will be able to hold out. As painful it is, the supply side has still maintained control over an orderly decline of prices, despite all the trouble.
| 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 | € 2,10 |
Stable |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1,20 |
Weak |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 1.20 |
Weak |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,00 |
Weak | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 0,90 |
Weak | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,70 |
Weak |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.65 |
Stable |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.60 |
Stable |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 0,80hh |
Weak |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.00 |
Steady |
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