This week: No one would deny that, a year ago, the positive development in the first months of 2021 would have seemed unlikely. Commodity prices around the world have risen significantly, the major economies have come through the pandemic period quite well, and people have coped with the restrictions better than expected. The situation in the northern hemisphere is improving week by week and more and more people are returning to something approaching normality in their lives.

The market for cattle hides, like many other commodities, has seen a very strong recovery. In fact, we have reached prices for cattle hides that are higher than before the pandemic. Only the next few months will show whether this can be justified by strong demand for leather. In the spring of 2021, demand for cattle hides remained very stable, even though there was a shift from market to market. In this respect, we also experienced a situation this week that we have been seeing for many weeks. Business in Europe was very stable and supply to the leather industry was at a steady level. In Asia, especially in China, the situation remained weak for us. The number of inquiries and the interest has increased again in the last few days, but the price expectations, in combination with the increased freight costs and the currency situation, still did not allow us to complete any business, unless it was with heavy discounts in anticipation of expected, strongly decreasing prices in the near future.

We are still in the second quarter, which is the transitional period between two seasons. It usually takes until well into the autumn before it is finally clear under what conditions and in what volume leather demand can be expected for the winter quarter. It is clear today that with the significantly increased price of raw materials, chemicals and, of course, transportation, we can expect very difficult price negotiations and rising prices next season. It is therefore not surprising that standard articles and colours are hedged at supposedly attractive prices wherever possible. How the demand situation will develop can hardly be predicted at the present time.

As in previous weeks, our business activity was again almost entirely concentrated on the European market. The usual delivery programmes for the coming weeks will be completed next week. At least for the month of June, there seems to be no decline in demand yet. However, for those hides that cannot find a home in Europe, the situation is deteriorating daily. It does not seem at all that customers in Asia will accept higher prices in the foreseeable future.

In figures, this meant that prices in Europe did not change much. Price adjustments for levels that no longer appeared to be in line with the market from the previous month took place and were in line with market realities. The lower slaughter has not yet led to any significant sales pressure, so that even the very low bids from Asia have so far been avoided. This will probably have to change in the summer.

The kill: Despite the reopening of restaurants, slaughter remains rather low and disappointing. The calculation in the slaughterhouses remains very difficult and farmers also feel no serious increase in sales pressure at the moment. Weights remain surprisingly high for this time of year.

What do we expect: The market situation is uncertain and business and demand are dragging along. We are increasingly concerned about the growing price differences between Asia and Europe. These gaps have to be closed eventually and we would not be surprised if this happens in the summer.

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