German Perspective - 22.10.19
22/10/2019
The fundamentals have not changed and it is more a seasonal issue than a profound rise in demand. In any case, something is better than nothing. Tanners seem to be shifting more and more into a cherry-picking mode. The general idea of a global surplus of hides (possibly correct) is obviously raising the idea of being able to pick only the best articles, which is pretty difficult even from just a scientific approach to the issue.
A lot in this business is now becoming very scientific. With all the problems they face, leather technicians have become more scientific and believe they have extremely innovative ideas, which in most cases are ideas that were already old-fashioned 25 years ago. Buyers and sellers have become more scientific in their analysis of market scenarios and the general public is becoming scientific in its views about the general future and the way people are going to eat and live in the near future.
From a distance it might be that expectations are running high and patience is limited, but situations change more slowly and more in keeping with reality. Public opinion and media reports in northern Europe may have created emotional levels that have left the global reality behind. The Apocalypse may come some time, but is not as close as many think yet and the masses are still pretty distant in their lifestyles from what they are expected to be by some.
When the excitement dies down, we still have the same problems to deal with for the 2019-20 leather season as before. Leather demand is likely to be stable, at best, if it does not shrink further. The demand in previous seasons has not been enough to absorb the raw material produced and one would have to be more than optimistic to believe this will change in the coming season. This will not be a linear situation and there might be periods with better or worse business at different times. There might be quality ranges that are hit more than others, but even now towards end of October, when most decisions for leather types and orders will already have been taken, one cannot find too many arguments to say why leather demand should suddenly see a turnaround or global beef production suddenly shrink, making it easier to balance the supply of hides and skins. This means that an even better feeling for the short-term trends is going to be required to avoid running into hidden traps in the market.
Business and sales this week were worse than the situation we describe. The cherry-pickers were around and active and if one was willing to support them and had the material to please them quite voluminous business would have been possible. Not pleasing them and insisting on reasonable packages limited sales substantially. The demand for heavy males is still the best. The same applies to cows, while heifers have lost a bit of the attraction they gained in the summer. Low grades could be sold, but at prices that would burn quite a bit of money; this might be still possible at a later stage.
The kill: The seasonal rise has not really started yet. Weather is still too warm and farmers and packers haven’t really yet met for the show-down. Consumers have not yet switched to winter mood, and this might still need a few weeks.
What we expect: We find it really difficult to get a clear picture and to find a reason for any big change. A good round of Asian interest and sales would be needed to build a solid base for the rest of the year. By the end of November we will already face again the Chinese New Year influence; the European market is not strong enough alone.
| 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 | € 1,20 |
Stable |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 0,65 | Stable |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 0,65 |
Stable |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 0,50 |
Stable | |
|
30/+kg |
33,5/35,5 kg |
27/+kg |
29/31 kg |
€ 0,45 |
Stable | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,15 |
Pressure |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.15 |
Pressure |
|
| 40/+ kg | 45,0/48,0 kg | 34/+kg | 38/40 kg | € 1.05 |
Pressure |
|
| Thirds | 15/+kg | 25,0/27,5 kg | 13/+kg | 24/26 kg | € 0,30 |
Weak |
| Thirds bulls | 30/+kg | 38,0/40,0 kg | 24/+kg | 33/36 kg | € 0,40 |
Weak |
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