German Perspective – 14.08.18
14/08/2018
Some business was finally booked. Interest and purchasing were definitely more spread, no longer as isolated as before. The USDA Export Sales report confirmed market activity in the US as well, so it is certainly correct to talk about a larger round of purchasing from Asia, mostly from China, South Korea and Thailand.
As usual, some already think this is a turning point for the market, but it is far too early to judge. Many buyers had been running the same strategy, which might have been a coordinated effort, and they were holding out for as long as they could. Many of the large sellers around the world also needed a good reason to ground the market and to get away from the one-way street we had seen for such a long time.
The only way to ground the market was to show larger sales, so as to spread the impression that demand has picked up. Tanners need more raw material and the endless downward road has stopped. Business might even be boosted by some larger, long-term programme sales.
If one were to spread the number of hides which have been moved from various origins into a longer perspective, one could say that some unsold stocks have been cleared and some programme sales which cover several weeks or even months have been aggregated. This proves the story of better business.
At the end of the day, we should not complain. A sale is a sale and as along as the contracts are honoured, some raw material has been pushed into the pipeline once again.
We are in mid-August and there is unlikely to be a change in leather demand. This is simply because new leather contracts are not being made during this time. We won’t know if overall leather demand has bounced back until at least the end of September.
The reality is that either tanners could not wait any longer to refill their pipeline, or they felt it would not be wise to wait any longer for cheaper prices in preparation for September/October leather production.
Many people are already suggesting that better sales should immediately mean that prices have to rise again. We don’t think there is too much room on the upside, however, because there are still many hides waiting for clearance. Only several more weeks of good sales would justify the conclusion that raw material stocks have been depleted enough compared to existing leather demand.
This will be the exciting news for the coming weeks and we should enjoy for a moment that Asian tanners were not able or willing to wait for the suppliers’ visits prior to ACLE or to bet on a total market meltdown in Shanghai itself.
Sales were better last week, with cows and lighter weight bulls seemingly the most attractive items. Prices had to be accepted as market, but they were still not good enough to compensate for the current abattoir prices. Sellers were faced with a choice between taking the offers and moving their product or keeping it and hoping for the best. We took what we could and hope now that the abattoir prices finally adjust accordingly.
It was one of the better weeks in terms of volume, although without cleaning all stocks. Prices finally matched the levels of other origins, but it was not enough to compensate for abattoir levels.
The kill: The unusual weather continues to have a major impact. Temperatures are down, but there is still not enough rain and so cattle prices are down, beef demand is low and quite a lot of beef is ending up in freezers. It is unlikely that this year can be saved in many parts of the country.
What we expect: There is now some hope that the total pessimism could be over. This would require follow-up business in the next few weeks. Geopolitics is a difficult subject at the moment, although it has lifted the value of the US Dollar, which helps exports. There are plenty of questions and options for the coming weeks.
| 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 | € 1,10 | Stable |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 0,95 |
Stable |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 0,80 |
Stable | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 0,70 |
Stable | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,60 |
Stable |
| 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 | € 1.55 |
Stable |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € n.a. |
Weak |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 0,80 |
Steady |
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