German Perspective - 04.06.19
04/06/2019
We can see a similar pattern this year with the only exception being that the low season is starting with high stocks everywhere. Demand for leather and hides continues to fade and the congestion of raw material and semi-finished hides intensifies. Even those who were still ignoring the facts and continued to believe the usual cycles would return are now beginning to accept that things are different now.
The logic is pretty simple: if demand can’t solve the problem, supply has to do so. This means that, week by week, all over the world (including part of Europe) we see reports that confirm that more and more hides are no longer being collected and processed because the costs cannot be covered by the sales revenues.
The patience of the industry is beginning to disappear and the hope that cheap hides might become more expensive is fading if it has not already been completely eroded. As usual, the trade is very emotional about all this and one gets the feeling of panic in some places.
Leather production will not come to an end and several tanneries and supply chains are still working at close to normal levels. Successful finished products made from leather are far from becoming cheaper. However, this applies only for certain sections of the market; for the rest a solution has to be found. Lower prices to stimulate demand are not an option.
Markets always come back into balance eventually. The road might be painful and winding, but the end is clear. It might require some pretty tough decisions though.
As far as business is concerned, last week was a copy of many before. Since the trade wars have intensified and the tensions have increased, the next steps remain unclear. We are lacking customers confidence, in particular in Asia. The strong players are beginning to realise where the bottom of the market is and if they get offers that are close to that, they are accepting them. In the case of cow hides, Europe is in the game, but not when it comes to males. The beef industry has not been willing to help.
Trading this week has once again been isolated to the strong and regular buyers in Europe, supported by some very aggressive bids for low grades from Asia.
The kill: The kill continues its seasonal decline, as do weights. Holiday interrupted weeks have squeezed the numbers down.
What we expect: We are getting close to having to make some serious decisions about male prices. Except for extra-heavy hides, a major correction is required and the next round of abattoir buying will tell us if the trade and the beef industry really understand the situation. Prices will stay under pressure and it is unlikely that we are going to see any major change soon.
| 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 | € 1,50 |
Weakish |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 0,70 | 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 |
€ 0,55 |
Weaker | |
|
30/+kg |
33,5/35,5 kg |
27/+kg |
29/31 kg |
€ 0,50 |
Weaker | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,20 |
Pressure |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.25 |
Pressure |
|
| 40/+ kg | 45,0/48,0 kg | 34/+kg | 38/40 kg | € 1.15 |
Pressure |
|
| Thirds | 15/+kg | 25,0/27,5 kg | 13/+kg | 24/26 kg | € 0,30 |
Weakish |
| Thirds bulls | 30/+kg | 38,0/40,0 kg | 24/+kg | 33/36 kg | € 0,50 |
Weak |
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