German Perspective - 04.12.18
04/12/2018
This week was once again pretty much a copy of the previous ones. The only exception may be the renewal of several regular programmes that traditionally cover December and January to avoid any kind of discussion around Christmas or the first week of the New Year.
This year the holidays fit well into the working week (Christmas Day and New Year’s Day both fall on a Tuesday) so that most of the industry and businesses will be closed, except the ones that traditionally have to work. More and more tanneries are trying to curtail soakings early this year. Some are trying already to refrain from soaking in week 51 to allow hides to come out of the drum before the break and await reopening for further processing. Even tanners with orders in hand are running slowly and are in no hurry to keep production high.
In the past years this was different and, at least for automotive tanners, every possible day of production was in use. In cooperation with contract tanners, the throughput of chilled hides could be maintained and any kind of salting and storing avoided. This year the hide flow is stuttering. Slaughter is higher than soaks and this means that already hides are beginning to pile up and decisions about how to handle them have to be taken.
The options are few. Either you salt or they have to be contract-tanned at the supplier’s risk and using the supplier’s stock. Wet blue or wet white, tanning recipe and splitting substance would all be in the hands of the contract tanner. It is pretty obvious that for the extra-heavy males there will be only one decision and this is auto-related tanning, which can become a headache if lower kill or better demand mean no additional hides on top of the regular kill.
Most hope for the best and that a sharp drop in the kill towards carnival time will then filter material that is currently surplus back into the pipeline.
Apart from this, the trade is discussing how far the price adjustment of the heavy males has to go. It’s not a surprise that opinions vary and the super-optimists believe that the adjustment will be limited. Analysis of the global price spreads and the supply-and-demand balance suggests that an adjustment of 25% would not be a surprise to anyone, but it is not difficult to understand too that mainly the large producers consider this out of the question. Time will tell. At the same time the price for cows has hit the bottom and is likely to stay there as long as competing origins do not drop to regain market share.
A sufficient correction to stay competitive in the global market has not happened for males because the key players completely ignored the possibility that the EU tanning industry would, one day, fail to clean up production. Now it has happened and if it is necessary to find new home for premium, extra-heavy hides, they will have to fit into the price grid and leather markets of the potential new buyers. Except for additional transport charges and salting costs, which reduce revenues, the price ranges are totally different.
Sales this week were not so bad, even though the feeling was different. Some cows, some heifers, some males for regular clients added up to a total that was not so bad considering the present conditions. However, trades are subsidised by price concessions and we are doing almost everything to hold onto our quality and regular clientele. Prices were about 2%-3% lower for cows and 5%-8% down fpr males for December deliveries. January prices were not obtainable yet.
The kill: Seasonal weather will keep the slaughter levels high. There are plenty of cattle around waiting for slaughter, but beef sales are not sufficient. This means we will still have enough supply for higher kills in the months ahead.
What we expect: EU hides will always find a buyer if they are adequately priced. If the price is right, one can actively manage sales. For cows this is working, just about, at the moment. For heifers too, but for bulls we are miles away. If this problem is resolved with the abattoirs, sales will recover, but if this painful move is further delayed the present problems will persist.
| 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 | € 1,60 |
Corrected |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 0,90 | Stable |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 0,70 |
Weak |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 0,58 |
Stabilized | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 0,53 |
Stabilized | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,50 |
Weak |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.50 |
Weak |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.40 |
Weak |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 0,40 |
Weak |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 0,80 |
Weakish |
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