This week: The war in Ukraine continues unabated. The brutality and aggression of the Russian invaders is increasing. The courage and strength of the Ukrainian resistance is admirable. Tanneries in Ukraine are at a standstill and this has almost completely blocked supply routes and led to a rapid supply gap in the articles used in Italy from Ukraine. The light hide sector is the most affected, especially semi-finished products.

It is quite clear that no matter what happens, this supply can neither be compensated for in the short term nor resumed in the foreseeable future. This means that many buyers have had to find replacements at short notice, which is not easy with these particular hide types. Where similar or equivalent goods were available, selling at asking prices was possible relatively quickly. It is just that very few sources are really suitable for this. Beyond that, the situation was clearly different.

The meat industry is still trying to convert the lower kill and the considerably higher prices for live cattle into higher prices for by-products, but this is proving difficult owing to the general uncertainty and the fact that there is no correlation between the beef and hide markets. Sales of heavy bulls are also not as easy as one would expect owing to lower production and resistance to higher prices from the leather industry. For other standard types, such as cows and heifers, the situation was no better. The reluctance of the leather industry to pay more is increasing day by day; this will not surprise anyone. They take what they need from regular and reliable suppliers, but no more than that. 

Owing to the rising covid-19 cases in China and the resulting disruptions in transport and production, the reluctance of customers from there to buy has also increased. It was not really an active sales market in the last few weeks anyway.

There were offers and requests for information but in the end very little – if anything at all – was bought. There is simply too much uncertainty in China at the moment about how the economic situation will develop and especially how the government will react to the pandemic. All experience shows that uncertainty in China is one of the worst things for business and demand.

As there is also no immediate sales pressure owing to the low slaughter, sales were not particularly extensive this week either. Deals with regular customers in Europe were possible and price changes were very small. Mostly it was really just a matter of minor adjustments to the previous deals from February. Overall, the consensus among very close customers was that major price changes in March make little sense, given the uncertainties. At the same time, however, this means that major adjustments may be necessary in the next negotiations if there are decisive changes. As we all know, decisive changes could happen any day now.

The kill: Livestock prices remain high and are likely to rise further. The kill fluctuates from day to day, but overall it is still quite low and at the lower end of expectations. As far as we know, nothing will change in the next week.

What we expect: We have more concern than hopes about the future of the market, at least if one deals honestly with the known facts.

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