This week: Taking a holiday is probably the best thing to do at the moment, in a time that presents so many challenges. The increasing political uncertainty with its consequences for the global economy makes it necessary to think about how business will progress in the coming months. At the moment, forecasts and assessments have the quality of a lottery and lack a secure and reliable factual basis. Sudden events can throw everything overboard again within a very short time.

Given the holiday season, activity in our market is also very limited. Little business always means plenty of opportunity for opinions, political manoeuvres and interest strategies and this August is no different. Opinions and views on market developments could hardly be more contrasting between many players. On the facts, though, very little has changed in our market. The kill is low and this is causing under-utilisation in many processing units. Some are trying to react to this with appropriate capacity adjustments, others are looking for salvation in the expansion of their supplier base and are prepared to accept very high costs and very long distances for this.

On the sales side, European buyers have now almost completely left the market and there are no decisive impulses coming from Asia either, indicating that the leather industry, especially in China, is expecting substantial leather business in the coming months. Consequently, this still means that despite the reduced beef production in Europe and other regions, it does not appear that the leather industry is currently undersupplied with raw material.

It is completely irrelevant how the situation looks in the middle of the summer. What is more important is how the balance will be in the remaining months of the year or even in the entire winter half-year. Business-wise, there is really very little to report at the moment. In Europe, activity has almost come to a complete standstill and only very isolated, random deals for special items could still be concluded. Mostly these are lighter weights. In China, interest in cow hides continues to be seen, but only at the prices that the customers have in mind. The bottom line is that this has left us with very few opportunities to think about or close sales.

The kill: The kill now seems to have settled at the lowest possible level. Lack of labour, holidays and unsatisfactory sales have lowered the quantities to extremely low levels. The hot temperatures also play an important role. We think that this situation will not change significantly in the next three weeks and expect the beef market to recover only slowly after that. The most interesting question, however, is how the kill will look from October onwards, because in principle there is still enough live cattle available for the last quarter.

What we expect: We see no triggers at all that could change anything about the current paralysis of the market. The cautious optimism of the first quarter has cooled considerably to date for many well-known reasons. Only the automotive industry is still spreading positive forecasts for production in the rest of the year. Otherwise, all other leather-processing industries have become much more cautious in their estimates for the coming months. In our view, the real inventories along the production chain will be decisive for the further and fundamental market development and the tensions continue to grow.

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