This week: The holiday season is with us. This would all be far less significant if the conditions we faced this year before the holidays were different. Normally, prices are often under pressure before the holidays, as purchases in Europe decline, deliveries are interrupted and only sales and outflows overseas remain. However, there have also been years when tanners actively wanted to supply their production for the first few weeks after the holidays and therefore the sales pressure before the holidays was not too high. Not this year.

In the end, it all depends on the demand for leather, which determines how much raw material is needed and how busy the leather factories are. For some time now, people have been wondering how the reduced capacity utilisation in Europe could be reconciled with the overall stable or, in some cases, even increased supply of raw materials. There have been many theories about this.

For the lower-priced goods, primarily cow hides, there has been the possibility of selling them to Asia for months now, if one was prepared to accept the price on offer. For other hide groups, the situation is less clear, which is why there were a variety of views on what was happening to hides that could not find a home in the European drums. It is now increasingly clear that these hides have been parked between the various production stages. They are slowly but surely becoming an ever greater burden.

From salted hides to finished leather, larger stocks can be found everywhere. This is not a problem as long as the owner sees no need to sell these goods; this means the material is not available on the market. However, there are increasing signs that there is a desire to sell the goods and that this is directly linked to a dwindling optimism that the demand for leather will increase.

This week’s sales were clearly characterised by this overall market situation. In Europe, we could no longer see any buying interest, as tanners are obviously preoccupied with other problems than the fear of possibly not having enough raw material available. Overseas, the market is the same as we are used to. There are always buyers, but the situation has already been recognised there too, or they are also in the same situation.

It is relatively easy to take advantage of the opportunity and further reduce the price of your raw material stocks. As a result, there were only very low bids, and this week we decided to skip them. For some of the main categories, we have now returned to price expectations that would make the collection and preparation of the hides no longer commercially viable. In the end, apart from a few smaller deals for niche manufacturers, there are no sales to report.

The kill: The only thing we can see that is currently behaving reasonably normally is slaughter. The holiday season is making itself felt; in some cases entire slaughter days are being skipped, which of course means that volumes are falling, but that is hardly surprising for this time of year. In our region, conditions are almost perfect for the farmers. Warm temperatures, sufficient rain and at the same time higher milk prices and stable prices for live cattle. This is unlikely to change much in the next six weeks.

What we expect: Making any kind of market forecast at the moment is relatively pointless. We are facing a structural problem and not a problem of temporary fluctuations in supply and demand. We don’t know how others are dealing with this situation, which makes it urgent to start looking at possible scenarios for the rest of 2024. The end of the holiday period at the end of August leaves only four months of this year to go after that. The traditional tools and probably also past experience do not appear to be particularly useful, at least at the moment, for gaining a reliable picture of future developments In any case, there is no sign of a rapid improvement in the coming weeks.

Price Table

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