What happened this week: It is fair to say that almost everyone had a decent September as far as sales and shipments were concerned. The industry was far more focused on price levels and supply at the abattoirs and generally busy in its attempt to find an adequate fine-tuning of prices for the rest of the year. That included the usual games on either side.

The focus in our part of the world is still on the automotive-related raw materials. These are namely the high-quality, heavy bull hides that are also the opinion drivers of the slaughter industry. The beef industry is of the opinion that automotive leather production is back to the pre-corona levels and tanners should be willing to pay prices at pre-pandemic levels. The gap between the two sides remains wide and so far both sides have dug their heels in.

The business for standard cow hides was thought to be on safe ground with relatively stable demand, in particular from China. Here too there have been differences of opinion about the adequate price level, but the positions were not as far apart.

Everything changed by Wednesday afternoon or Thursday morning of last week when news from China came that German hides are banned with immediate effect there. The reason: an outbreak of the bluetongue disease in Germany. This has sent shockwaves throughout the trade. Goods in the port in China, containers afloat as well as containers ready for shipment add up to pretty sizable numbers. It was another nice demonstration how quickly external decisions and conditions can influence the business.

It remains unclear what has triggered the action in China, because bluetongue disease is spread all over the southern parts of Europe as well as in Germany, where there have been cases a in the south-west since 2018. However, the spread is under control. It is transmitted by an insect bite and the majority of cattle in Germany are vaccinated. Other countries that have suffered from bluetongue infections for years are not on the banned list of the Chinese import authorities.
It seems at least that containers shipped before October 17 will still be accepted for import. For the rest, tough negotiations will certainly take place.

Trading this week was focused on the heavy male hides for the European tanning industry. Anyone willing to discuss reasonable price levels found ready buyers. Anyone insisting on inflated, ambitious price levels had to wait and see. Sales to China for shipment in November have become impossible. It is useless to discuss price trends until the future of the marketing potential of the hides is known.

The kill: The kill is just following seasonal patterns. It is rising and weights are too. What the pandemic means for consumption between now and the end of the year is still unclear.

What we expect:

It is useless to speculate on the market trends without having stable facts to hand. The slaughter industry will - no matter what - try to push, but the market conditions will dictate. This points to a stalemate situation until a decision in China is taken.

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