This week: As always, when the market here has to adjust downwards because the international markets make it necessary, it happens too slowly and with unnecessary resistance. The facts do not change, neither do the calculations, and the fact that we are at the end of May and thus just before the summer period does not change either. As a seller, everyone is free to withdraw from the market, store the goods and bet on an improvement. For those who don’t want to or can’t do that, however, it makes little sense to try to force prices and sales that the market doesn’t want, doesn’t have to accept and possibly can’t afford at the moment. This is the situation that has been dragging on for weeks.

Sellers are trying to win support for their prices in the market with the argument of a lower kill and the reference to individual sales of special items. Buyers are aware that there is no lack of offers or of goods available. So everyone waits until the last moment, concentrating only on deals with core suppliers and where deliveries are absolutely needed. This, however, prevents a really solid price determination, which would only be possible if the market were balanced in terms of supply and demand and the prices at the slaughterhouses were close to the market reality.

Such situations are not new and always lead to a broad market view, which is then reflected in a very wide range of price ideas. This is less pronounced in the case of cow hides, which simply have to align themselves much faster and more closely with international market prices. With bull hides, the slaughter industry still tries to create a special status.

Unfortunately, it always overlooks that here, too, economics cannot be ignored for ever and that male hides here have moved too far away from international price levels.

Provided one maintains a trusting and realistic relationship with one’s regular customers, the usual programmes had to be re-contracted this week. If one was prepared to take market realities into account, then continuation was possible over the next few months and this meant that discounts of 10%-15% were necessary for cows and 5%-10% for male hides against a month ago. It does not necessarily correspond to the actual market price, but is a level that could be agreed upon between regular customers and suppliers for the next few weeks. This means that, at least for female hides, we are slowly getting back to the price level of 2020, which at the same time means that there are already different types of hide that are at least as attractive for the production of collagen as for the production of leather. In other words, there is at least one sales channel for some of the product today, which does not necessarily have to be in the leather industry. However, if the supply increases in that area, then of course it also leads relatively quickly to a balancing of the markets there.

Overall, however, we still have the impression that there is still some unsold product on the market despite the low kill of the last weeks and months.

The kill: Slaughter was low last week due owing to the public holiday for the Ascension on Thursday. The difficulty in finding a reasonable balance between the price for live cattle, the calculations of the beef industry and the price expectations of the food retail trade remain. The average weights of hides continue to fall within the usual seasonal framework; next week the number should recover.

What we expect: Considering that we are at the end of May, one has to assume that the pressure on the market will continue. The lower kill helps, but does not solve the problem overall. With cow hides, we assume that there is no longer much room for them to go down, but with bull hides, the increase has been too strong and, unfortunately, the price adjustment of the last weeks and months has been too low. This continues to pose significant risks, unless the market recovers significantly in the next few weeks. However, this would require a sudden and significant improvement in leather demand, which seems unlikely at the moment owing to the timing and the general economic environment.

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