What happened this week: We are heading towards the holidays and in Europe most are happy to have the break in sight, not least because the first half of the year proved to be extremely difficult. Constant price pressure and the lacklustre consumer market meant many operators in the field had a difficult trading environment. The same applies to many tanners. Only a selected number of specialty and/or quality producers enjoyed the lower raw material price levels, being able to hold their leather prices reasonably stable. The ongoing shift in production to China and the Eastern bloc is also evident. Despite this, a number of tanners are refusing to accept that increasing volumes of raw materials find homes in the East. This shift is not only influencing daily price levels, but also changing the established market rhythms in Europe. With less emphasis on holiday seasons and a lead time of shipments of around 6-8 weeks, the old market and trading patterns are now applying to a lesser degree as other variables such as currency fluctuations and logistics are becoming increasingly influential, and these have been the determining factors in the past week. Asian demand remains intact, but price levels reached their limits, despite the firm trend in the USA. Tanners can no longer follow the market, at least unless they can obtain increased leather prices for the next season. They are trying to surmount the situation by again buying cheaper alternatives – at least for those customers who will accept the end result. The weak dollar is also having an effect and has increased asking prices for dairy cows by another $1-2 per pcs. which is currently not being attained. So, despite the underlying interest or even uncovered positions of some tanneries, one had to bite the bullet and accept unchanged prices or hope for better times ahead. In the end, the seller has to face present lower € revenues or he will have to speculate for higher prices later in the summer. Sales in general were enough to compensate for the lower kill and with the renewal of regular contracts in Europe, levels were acceptable. So, the situation remains that business in general is not bad, but margins continue to be depressed. They will have to be corrected in abattoir price levels eventually or in higher selling prices, following a general increase in leather prices. However, this can – if at all - not be expected before September when in many cases new leather prices have to be negotiated. The kill: No change. For the next 6-8 weeks the kill will be running at seasonal low levels. In some categories such as high quality heavy cows the shortfall is already becoming difficult to manage, because for the moment most tanneries are still operating in full and want their supplies before the holiday shut down. What do we expect? No changes. The market is under tight control. Generally inventory levels are low and consequently price pressure deriving from desperate sellers or overstocked buyers cannot be expected. Tanners are unwilling or unable to lift their buying prices at the moment and sellers aren’t being forced to move much either, so the currency might be the only trigger for adjustment in € terms – at least for cows.
|
Type |
Weight range |
Avg. green weight |
Salted weight |
Avg. weight salted |
Price per kg green weight |
Trend |
|
Ox/heifers |
15/24,5 kg |
22,0/23,5 kg |
13/22 kg |
20/21 kg |
€ 1,55 |
Steady |
|
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,37 |
Steady |
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 1,50 |
Threatened |
|
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,36 |
Threatened |
|
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,23 |
Threatened |
|
Bulls |
25/29,5 kg |
27,5/28,5 kg |
|
