What happened this week: We are currently witnessing a tough period. With the production season returning to the normal pace the market struggles to find a safe ground. Most tanners feel the time has come for the long awaited corrections, which applies mainly to the classical categories which have long been dominated by the demand of the Far East. It would perhaps be easier to judge appropriate market levels if the dollar exchange rate had not been so unpredictable. We have already lost about 3 % since beginning of the month and forecasts are very difficult when logical parameters fail to inform. The rising oil price is also starting to worry even those who until recently denied its impact. Despite decent economical news about global growth and consumer confidence many in Europe remain unconvinced it will result in more demand and higher prices for raw hides. The strongest market impact today is born from reduced expectations regarding the Chinese market. Most expected the growth and dominance of the first half of the year to continue and were, consequently, relaxed about the slow start after the summer holidays in Europe. With higher kill and continuing absence of the Far East in the European markets many in Europe realise now that there are cheaper alternatives available in the world and that the lack of finished leather sales may be caused by available cheaper sources capable of satisfying the need of the mass producers today. Otherwise the week was a bit better with at least adequate interest in heifers and bulls. Here price concessions have to be made but still within a normal and acceptable range which, again, voices the need for price reductions at the abattoirs. Interestingly, we have now seen what was already expected in May when the new member states joined the EU i.e. that a lot of cattle is or has been slaughtered in the West, resulting in low production among the new members. Consequently, not only prices for hides are high but local tanners are facing procurement and quality problems. Some of this is now seen in the West with difficulties in digesting higher price levels. Hence, the week can be called a seller’s challenge with only a partial success and a disappointment in the Far East. The kill: Entirely steady on levels we would consider normal for this time of the year. Weights are rising very slowly and it will be interesting to see what the colder nights will mean to the offer of cattle in the coming weeks. What do we expect? In the next week we shall see China on holidays and the Koreans back. We have no reasons to believe that this will stimulate the demand from Asia in the coming weeks and that they will wait for the final results of the negotiations with their finished product buyers. In Europe most will wait for the results of the abattoirs buying for October. If the necessary adjustments are made (10-20 %) we could arrive at levels where normal trading will be possible. Leather business is generally reasonable if raw material prices fit it.
|
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 |
Weaker |
|
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,42 |
Weaker |
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 1,53 |
Weak |
|
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,40 |
Weak |
|
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,23 |
Weaker |
|
Bulls |
25/29,5 kg |
27,5/28,5 kg |
22/ 27 kg |
25/26 kg |
€ 1,53 |
Weaker |
|
|
30/39,5 kg |
36,0/37,0 kg |
24/34 kg |
31/33 kg |
€ 1,47 |
Weaker |
|
|
40/+ kg |
45,0/48,0 kg |
34/+ kg |
38/40 kg |
€ 1,37 |
Weaker |
|
|
