German Perspective - 11.06.19
11/06/2019
So far, although this has not really been recognised by the public, the cull kill of pigs in China and other parts of south-east Asia continues and is reducing the swine population in the region. This has triggered a massive demand for imports, which is good news for the farmers all over the globe but eventually will also have an effect on the demand for beef. A lot of people are presently scratching their heads over what effect we have to expect, not to mention the rise of non-meat alternatives, which are beginning to hit the market too.
It is clear that all this will have an impact on the hide and skin industry, but it is also true that this will not happen any day soon. For the first half of this year, the oversupply situation for cattle hides has persisted and the market continues to fail to find either a solid valuation or any sign of a fundamental change. Fewer hides are being collected and processed because returns do not cover the cost. If this trend continues, the numbers should not be underestimated nor should one believe that such a trend can be quickly and easily reversed when desired.
It is also true that the number of hides going to waste is easily compensated for by the heavy slaughter numbers that we have seen globally for some time. This does not change anything for the present trading and revenue potential for hides. It is, however, interesting that strong players are, seemingly, beginning to re-stock, even though it is obvious they are not really expecting a sharp rise in leather demand very soon. Those with strong cash resources might see it as a one-time opportunity to invest in a natural resource at a time when it is cheap to do so and low interest rates offer few other reasonable investment options.
Trading this week was once again light, but the number of bids coming out of China has been significantly higher in volume (and significantly lower in price). Interest was almost entirely focused on the premium selections of cows and heifers. The term ‘bargain hunting’ might best describe what we have experienced this week. With the declining kill and the limited availability of premium-quality hides, we were not willing to take chances or to panic.
The kill: The kill is now dropping fast and so are weights. Another holiday on Monday will see numbers stay low this week too.
What we expect: The market continues to be some way away from a recovery. The balance between demand and supply on a global scale remains in buyers’ favour and it might become a long summer. However, the market rules are beginning to work – however long it takes. It took us almost three years to get us where we are today. Now let us see how long it takes to get out of this. It is not going to take just months.
| 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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