German Perspective 03.12.19
03/12/2019
The seasonal increase is there, but demand usually exceeds supply from November to February, with the exception of the holiday period. Most years, prices and demand are stable and tend to rise in the first quarter of the year before settling back into the summer season pattern. Is the rise in activity and demand strong enough this year to support prices into the New Year? It would certainly be a surprise. Leather demand and penetration in consumer products is not rising. Seasonal shopping has started with strong numbers in China for Singles Day, November 11 (11.11), and the first polls speak also about a strong Black Friday (November 29). However, although private consumption is still pretty strong, leather products, with the exception of the small luxury goods market, are not claiming their share of it and continue to struggle to keep levels stable.
This is not just a problem in the western world because other reports in China say the huge surge in online sales does not include leather shoes, garments or upholstery. To relate this to the activities of environmental activists and to see it as a success of their campaigning would be a cheap excuse. The global consumer reacts in the majority to brand, price and fashion while retailers and manufacturers react to cost, margin and, more than ever before, to speed and simplicity of production. Since the markets are basically saturated, it is a breathless run to be the first to grab consumers’ attention and convince them to buy something that – most probably - they do not really need. In particular in apparel, including shoes, the consumer buys fashion and trend and only a very small part is really down to need. This is not a great argument for leather.
In the automotive sector in Europe the industry is in cost-cutting mode, which apart from cutting jobs, is usually also a tough time for component and material suppliers. Also here it is difficult to find supporting factors for leather, with the only consolation that, in several parts of the world, hides have become so cheap that finished leather can almost compete with plastic on price. However, this is not really the scenario with European raw hides.
As far as sales and business are concerned, it was a rather quiet week. China continues to buy all female hides if the prices are, at worst, unchanged. For male hides, there is very little appetite in Asia despite the recent rise in competing origins. In Europe tanners are mostly covered until early January and we expect the next round of regular business in the weeks before the Christmas holidays. So, we would call the number of sales low due to a general wait-and-see attitude on both sides and prices unchanged.
The kill: We are in the peak slaughter season, but the numbers are certainly not as impressive as one would have expected. The number of females in the slaughter mix remains unusually high, which is not good news for the coming year. Weights are still high and this situation should persist for the coming three weeks.
What we expect: On sales, we would still be surprised to see any major price variation, because we fail to see any reason for one. With the present level of production, we are just about in balance between supply and demand; higher price would just open the door to other origins, whose sellers would be delighted to grab some market share.
| 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 |
€ 0,55 |
Stable | |
|
30/+kg |
33,5/35,5 kg |
27/+kg |
29/31 kg |
€ 0,50 |
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 |
Stable |
|
| 40/+ kg | 45,0/48,0 kg | 34/+kg | 38/40 kg | € 1.05 |
Stable |
|
| Thirds | 15/+kg | 25,0/27,5 kg | 13/+kg | 24/26 kg | € 0,27 |
Stable |
| Thirds bulls | 30/+kg | 38,0/40,0 kg | 24/+kg | 33/36 kg | € 0,40 |
Weak |
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