German Perspective - 12.02.19
12/02/2019
In every report from all parts of the world, we can read about the great sales that took place in January before the holiday break in Asia. Some even try to give the impression that this flurry moved so many hides that all stocks are cleared and solid forward positions have been created, which provides good reasons for predicting a firmer market for the coming months.
But it might not be as simple as this; and this will certainly not apply to all origins and hide types. When the industry in China is back from its holiday, we will get a better feel and will know better if the two weeks of activity in January will see a follow-up, or if the requirements of tanners are filled for a longer period of time and need no further market action in the near future.
The influence of Europe will be limited, because here the tanners are far more regular in the market and their hide demand reflects a tightly planned production schedule for the next four to six weeks with less variation unless there are no major decisions taken, like we experienced at the end of November 2018.
Anyone who believes in a quick recovery will be disappointed. The soaks of the auto tanners have not improved much in recent weeks, nor are they likely to in the coming weeks.
We are now heading towards the Lineapelle exhibition in Milan (February 20-22) followed by the start of Lent, which traditionally brings an interruption to slaughter and tanning in many regions. We will then enter again into a longer phase of normal production until late spring when the season ends and activity in the leather pipeline traditionally slows down.
One can sense that, all in all, the market is swinging slowly back into a better balance for many hide types. However, we recognise massive price pressure from the leather market. Tanners are struggling more than ever to find a match between the quality and price ratios of their favoured hide types. This leads to experiments with other types of raw material, but that looks a bit like Groundhog Day. There is not much that hasn’t been tried before.
Business this week was once again slow. From Asia bits and pieces were seen and either super cheap offers were sought or interest was shown for quality hides at commodity prices. Both strategies were unrealistic and unsuccessful and most discussions were postponed until the week after the holidays.
The kill: Beef sales are reported to be quite challenging and supermarket sales slow. This has reduced the numbers and, from what the industry reports, we tend to believe that this will last for a while. After a reasonably good January, a break until after Carnival would not surprise anyone.
What we expect: This week we might see the first tanners in Asia returning to their desks. It is unlikely that they will jump into the market right away; they might just have a look around before all of the operators begin to return the week after. In our region the abattoir prices for February will finally be fixed and if further extended reductions for males can be achieved, with cows sticking to their levels, our hides should gain more competitiveness and the price gap between males and females will close.
| 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 |
Stable |
| 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 |
Stable |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 0,58 |
Stable | |
|
30/+kg |
33,5/35,5 kg |
27/+kg |
29/31 kg |
€ 0,53 |
Stable | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,40 |
Weak |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.40 |
Weak |
|
| 40/+ kg | 45,0/48,0 kg | 34/+kg | 38/40 kg | € 1.25 |
Weak |
|
| Thirds | 15/+kg | 25,0/27,5 kg | 13/+kg | 24/26 kg | € 0,35 |
Weak |
| Thirds bulls | 30/+kg | 38,0/40,0 kg | 24/+kg | 33/36 kg | € 0,60 |
Weakish |
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