This week: We are now fast approaching the peak holiday season. In a few weeks the first school holidays will end and the last ones in the Southern parts will begin. In addition to the schools, however, the manufacturing sector is facing company holidays. For the first three weeks in August, almost all businesses are closed. As always, this triggers different developments in our market. On the one hand, the companies here are planning the last productions before the holidays and also the first for the time after. Some contract tanners remain open and with clever use of capacity across the EU, some large operators can also process goods during their holiday weeks.

Slaughter numbers have fallen significantly, so the supply of hides is not causing much selling pressure at the moment. This means that the market for heavy hides in Europe is largely in balance, even during the summer period. Customers in Asia have found that their strategy of staying away from the market for a longer period of time and waiting for unsold volumes and the holiday season to build up greater sales pressure on European suppliers has not had the same success this year as in the past. A few weeks ago, attempts were made to put pressure on prices and to push cowhides back to the price levels of the beginning of the year with low bids. There were isolated deals at significant discounts, but this was of very short duration. In the meantime, prices for cows have risen again to $40 and more, without very much commodity being available. 

Price-sensitive buyers in China have tried to switch to lower-value hides in the last few weeks and this week we could also see a lot of bidding. One of our colleagues noted that he could have sold the few quantities available ten times over. We can only confirm this from our experience last week. On the other hand, more expensive material at the normal market prices did not attract much interest. The heavier the hide, the more expensive the unit price and the fewer the sales opportunities in Asia. This teaches us once again that, in the end, even after many years of development of the Chinese leather industry, it is still almost exclusively price and nothing else that influences buying decisions. Higher-quality leathers at significantly better-than-average market prices are still hardly on offer in China from local tanneries.

Thus, general activity remained rather manageable this week. Sales were almost exclusively concentrated on regular buyers in the European Union and only a few containers of low grades were sold to Asia. Overall, the volume of sales remained sufficient to place the current hide production. There were only insignificant changes in prices, with slight increases in super-heavy male hides, with almost completely unchanged price levels otherwise. Overall, it seems that, at the moment, due to uncertainty, everyone is happy with a period of stability. This means that the usual phase of summer calm is now beginning; it can be interrupted only by the next round of activity from Asia. However, it is already noticeable that many customers in Asia are giving a lot of thought to their export business and to logistics. Processing orders on time today is a task that is almost impossible to plan.

The kill: The kill fell significantly again last week. There is the impression that restaurants and supermarkets stocked up too optimistically and that current consumption is not sufficient to justify additional slaughtering activity. Further developments in the covid-19 figures and, of course, the terrible events in the flooded areas will certainly have a major impact on meat production in the coming weeks. We do not expect production to increase before mid-August.

What do we expect: Attention will turn back to customers in Asia in the coming weeks. Only they are in a position to trigger serious price movements in the markets in the coming weeks. It does not seem that customers in Asia can see any justification at the moment for paying current price levels, let alone higher prices. Consequently, they pick and choose offers from around the globe and wait for the market to swing back into their price range. 

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