What happened this week: During vacation time it is always very difficult to write reports. As we expected, activity was very low during the week and only further bargain hunting was registered. Some products were sold and the buyers came almost as usual from Asia. Isolated sales of dairy cows were the only other activity seen this week. The impression that not everything was dormant was created only by some interest in sheepskins. The rest was, again, many mails asking for cheap material or bids which continue to be about 5% below acceptable levels. Towards the end of the week, and this applies mainly to Friday, the focus of interest moved away from hides and more to general financial issues again. Continuously rising oil price and the sharp drop in the value of the US dollar triggered more concerns about the general market development in the second half of this year than we have seen for quite a while. At least those taking a more long-term view on market developments begin to wonder if there could be more threat to prices and demand than what people are willing to accept at present. At least in Europe it seems that many of the traders remain more impressed by the demand for hides from China in the first half of 2004 and, at least for now, the lower kill has more influence than any concerns about demand. We think that this eventually could become quite risky. August, which does not offer a real market place and a clear picture about demand and the leather business, has often been a misguiding month. We said this already many times but need to repeat that, without the results of the September exhibitions, it will be difficult to conclude what will be the long-term trend for the business and prices in the second half of the year. We are still concerned that many tanners, but definitely not all, are buying at present just to fill productions and not to generate acceptable margins. The purchasing power and the stiff competition due to the rising capacity in China are not allowing many to increase leather prices. The higher oil price will not only reduce many family budgets but also increase the cost of chemicals and energy for the companies in the second half of 2004. Assuming that tanners cannot increase their prices for leather and raw material prices do not adjust, we will have a tough time ahead and we have to consider how the leather industry is going to react. We cannot think about any alternatives which would have a positive result for the raw material market. Another piece of news this week was the official announcement that an old established Dutch tannery will cease production by the end of this year. The erosion of the European tanning industry continues and should not be ignored. The kill: Nothing new this week. Hot weather, holidays and reduced interest for beef continue to depress all slaughter numbers, hence the low weights and few hides. What do we expect? The main issue next week will be to find the right prices and the abattoirs. The reduced value of the US dollar, low weights and little activity should make it clear that abattoir prices have to come down. Butchers will have a different opinion. The selling market will not see any mentionable changes due to the lack of activity.
|
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 |
€ 1,40 |
Steady |
|
Dairy cows |
15/24,5 kg |
22,5/23,5 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 |
€ 1,43 |
Steady |
|
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,25 |
Steady |
|
Bulls |
25/29,5 kg |
|
