This week: Well, sometimes the old logic of self-fulfilling prophecy still works. For quite some time a number of players around the globe have been spreading the story of a hide shortage. Technically, hides can never be in short supply, for the simple reason that they are not produced for tanners to use. The hide and skin market may be as supply-and-demand driven as every other market, but it is completely dependent on beef production. The material can either be used right away or stored for later use, but strong or weak demand for hides will never determine how many hides are available.

Availability is easy enough to monitor because in the key markets we have a relatively reliable database of beef production. Cattle slaughter numbers are available. Also, the demand for leather in consumer markets can be monitored relatively well.

But there are two obstacles that make it difficult to analyse the imbalances. One is time; there is often a long lag between the raw material coming to market and the sale of a finished leather product. Secondly, we have a very long supply chain and transportation plays an important role; this can force people into making rash decisions when the flow in the pipeline is too slow or too fast to match either end of the production and consumption chain. Since our industry never learns from the mistakes of the past and is still very much driven by emotions, we get a repetition of history.

Demand and market activity have seen a massive boost in the last couple of weeks. Retailers, manufacturers and traders all reached the conclusion that the time was right to ramp up production and inventory. It’s not that there are more finished products being sold, but the hope that the world will soon return to normal, with the same consumption of leathergoods in the second half of this year as in years gone by, has triggered more demand and concerns have just been thrown overboard.

The excessive fear of 2020 has turned into an almost concern-free optimism at the end of the first quarter of 2021. Most likely, both positions are exaggerated, as all extremes usually are. For the moment, the hide business has become something like a seller’s paradise. Prices are steadily rising, there is a solid number of customers to choose from and the only problem is making sure not to sell too cheaply.

The next step is to convert this interest in raw material into good prices for finished leather and adequate sales of finished products.

Sales last week were largely satisfying. With the sharp gains in other origins we have been able to sell even the grades that were previously not particularly popular. If you were reasonable in the pricing, people took everything. The option would be to sit and hold back. We have the gut feeling that quite a few sellers prefer to wait for higher prices, but we have been quite satisfied to sell. This ended in a satisfying number of hide sales at prices not a cent below what we had put on the price list at the beginning of the week. 

The kill: In our region, the kill continues to be good and we are making up for the reductions seen between mid-January and mid-February. Weights are beginning to fall.

What we expect: We cannot see how the scenario can change in the short term. Sellers will become more hungry and only a few weeks of buyer resistance and falling sales could dampen the excitement.

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