German Perspective – 09.04.19
09/04/2019
Now, one has to look for clients while, at the same time, almost all clients are not looking for new suppliers. As a result, many customers are reporting having received plenty of emails with unsolicited offers and a large number of introductions from people trying to find interest for the raw material they are offering. Most tanners are not willing to carry out any major experiments and so they are sticking to what they know and what they are used to.
Leather demand continues to underperform, while at the same time there is no reduction in beef consumption and hide supplies. There remain a handful of areas where there is still balance, but in general there is always a load too many for the market.
For most of 2019, the market for cows has at least appeared to be on safe ground, with the market reasonably cleaned up by the flurry of sales into China at the end of January. Most of the contracts are shipped and sales agreed around APLF in Hong Kong made people believe that the bottom had been reached, with good prospects for long-term stability. In the end, we realised that the demand and the prices paid were tightly related to a short-term boost in lime split credits. This is believed to be to do with a short-term order for split leather from the Wenzhou region.
This period now seems to be over, with lime split credits falling rapidly, which is immediately converted into lower prices for dairy cows. People are even talking about the cancellation of contracts that were booked in Hong Kong.
There were rumours circling this week in the market about cheap sales from various EU origins. Indeed, one could not record any interest or reasonable bids against the offer lists at unchanged asking prices. What we have in mind and what was obtainable several weeks ago is far away from what other markets are willing to take today. As a result, if we want to compete in the battle for clients and sales, then the abattoir prices will have to be sharply adjusted again in order to reflect the current market situation.
With little chances for sales overseas, more and more people are looking for sales in Europe. This means more competition. One also has to come to the conclusion that many warehouses hold far more hides than their owners would like to admit.
It is really strange that a number of suppliers were not convinced that we are in a phase of fundamental changes in the leather business. They really thought that the falling market was a good time to raise inventories and to wait for the market to turn around in order to cash in. With the sun rising and the summer getting closer, time is short to liquidate these stocks. It might be impossible.
It is also getting more complicated to obtain timely payments, to have lines of credit opened and to have deposits sent. This is not a good sign either.
Sales last week were once again rather patchy. In our case, they mainly consisted of isolated deals for males with standard European customers. There was hardly any negotiation of price, and in the end it was necessary to take what was being offered if you wanted to sell hides. For the limited volume sold, we would call prices down last week.
The kill: The beef business is said to be very poor at the moment. Cattle is difficult to buy and premium cuts are difficult to sell, which means that the focus continues to be on the slaughter of females while males are limited in the slaughter mix. Weights have already started to fall and the reasonable weather means it won’t be long before cattle return to the fields.
What we expect: A lot will now depend on the new abattoir prices for April. If the necessary adjustment can be achieved, we have a chance to be competitive again. Otherwise, it will become increasingly difficult, especially in view of the falling hide weights. The trend continues to be downward.
| 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 | € 0,85 | Weakish |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 0,70 |
Weaker |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 0,60 |
Weaker | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 0,55 |
Weaker | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,40 |
Pressure |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.40 |
Pressure |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.25 |
Pressure |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 0,40 |
Stable |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 0,55 |
Weak |
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