What happened this week? Another week has passed and in normal times everybody would be enjoying the numerous holidays we have in the month of May. There are still holidays, but this year is different as people have already had so many days off or have stayed home due to the lockdowns. They would love to go for a short trip somewhere but, although restrictions are easing, a day trip is still something that can cause trouble. The real opening begins next week, but day trips are still restricted to most domestic holiday destinations. 

The corona pandemic continues to ease in Germany. Numbers are declining, but the risk of a return persists. The government is going to analyse developments in the coming two weeks in the hope of keeping cases under tight control. 

However, life is not the same. Despite almost normal activity in the streets, it is still not normal for shopping in retail. The easing of restrictions means people must follow physical distance guidelines and the normal in-and-out of shops remains impossible. Certainly nightclubs, music clubs and other entertainment locations are still almost completely closed. Shopping these days means buying the necessities, but certainly not shopping for pleasure. 

The limitations and restricted access mean frequently standing outside, respecting physical distance and waiting until other customers leave the shop before the next one can really enter. This means that the waiting time is unclear, so people have only enough patience when they need desperately to buy something. Otherwise they walk away or, in the best of all cases, they shop online. All the above is keeping retail consumption relatively low and shops continue to suffer. 

Automotive sales also remain weak. Potential buyers have a good number of reasons why they should and will delay any decision for a new vehicle. Uncertainty about their job and income is mixed with the expectation for subsidies from the government on a car purchase. However, so far nobody knows what the subsidies are going to look like. In general, it seems fair to say that, globally, production is either already recovering or the main concern of governments and corporations. 

At the same time, private consumption and investments are lagging. Many consumer products have been stranded on their way to the customer over the past months. Plenty of unsold stocks now need to be sorted before one can decide if new products can or should be ordered and paid for. 

This has now reached the tanning industry in Europe. Although production capacity is almost restored within the regulations, many tanners find that their customers — and the customers of their customers — do not enjoy the equivalent product flow to justify normal activity. As the week progressed, concerns were rising. 

While leather consumption is one concern, beef production is another. Several larger slaughterhouses have been closed, because they were becoming hotspots of corona cases. The beef industry is back in the negative focus again for the working standards and the conditions in which their subcontracted labour is living. 

Sales this week have been spotty again with a focus on the week-to-week renewal of supply contracts for fresh hides. Asia was once again sniffing around for better quality and heavy hides, but the price ideas had been too far away to be accepted. 

The kill: The kill is still very low and suffering from low consumption. Prices for prime cuts are falling and we are seeing levels we’ve never seen before. Next week will be another one with small numbers due to the holiday on Thursday. 

What do we expect: Things might get more difficult again and only the very limited supply prevents the next serious round of difficulties. We buy time at the moment, but by the end of the month and or early June we will see the next important junction.

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