This week: In the course of the next two weeks, almost everyone in Europe start the summer vacation. You get the impression that people just want to leave everything behind and enjoy a few weeks free of all problems. This is very understandable, but of course it only postpones the issues that need resolving. It is quite human, but not helpful.

More than ever, a division appears to have formed in the market in the build-up to the summer holiday between the optimists and the pessimists, with another very small group focusing more on what is plausible. The optimists obviously assume that the usual recovery in demand and prices will set in after the summer.

The pessimists see the large stocks of unsold goods along the supply chain; the optimists expect rather the opposite. The ‘plausible’ group takes a pragmatic position, according to which there is always some solution available. 

As far as general business is concerned, we have been in the typical pre-summer phase for many weeks now. The second quarter is always characterised by the fact that the contracts in the leather industry slowly expire. People have to prepare for the summer break and at the same time try to plan for the more active winter half-year. This is particularly difficult this year because we have to deal with conditions for which there is no historic template. That is probably why the division into the three groupings is more pronounced than one is used to in normal years.

Business last week was exactly as expected. There was little movement in Europe, apart from the routine business that still had to be discussed before the summer holiday and, if necessary, concluded. However, in terms of volume, this was certainly not a large amount. There was more activity from Asia at the beginning of the week than we expected. The problem, however, was the prices: the bids received were up to 15% below the current market prices. There was almost no room for negotiation, and therefore, at least for us, no major deals were concluded.

The interest in low grades was understandable, as obviously low-priced salted hides were wanted either just to fill production or to go to the collagen market. Enquiries for bull hides were, then, rather surprising, despite the low prices. At the end of the week one wonders whether it might have been better to have been one of pessimists after all and accept the bids even though they were too low. Time will tell.

So at the end of the week, the bottom line was not a particularly remarkable amount of sales, knowing that it could well have been much more. It remains the case that everyone is free to form an opinion about the genuine price level. If we stick to the asking prices, then the level has not changed much, and the same applies to the prices in Europe. But if we take the performance in Asia as a basis, then lower prices would be in the lists and reports.

The kill: The kill, at least in our region, somewhat surprisingly, again decreased significantly. It may be partly due to unavailable labour and the school vacations, but still the numbers are as low as we have not seen in a very, very long time. Planning for the next few weeks assumes this trend will continue and for the north of the country, this means we can’t expect to see an increase again until mid-August.

What we expect: We do not have much to add to the assessments of the past weeks. The Europeans have now said goodbye to the market and there are no signs from Asia that they are willing to bow to and accept the wishes and demands from Europe. We are quite sure that customers from Asia will continue to use the absence of their European counterparts to look for attractive offers in the coming weeks. Thus, with regard to the prices, things will only change if suppliers agree to accept the markdowns, especially for male goods, and thus accept a further price drop. However, this would require a significant adjustment to prices at the slaughterhouse. Perhaps here there is still too much influence from the optimists, who may be trying to protect their stocks from valuation adjustments.

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