What happened this week: In our previous report we displayed moderate optimism regarding this week but it turned out to be premature. The week has failed to generate the same level of business and interest as the previous one and recorded some, but significantly less, trading volume. Tanners around the globe continue their selective hand-to-mouth purchasing activities driven by the momentary need to cover leather orders. In Asia the inventory of upholstery tanners is obviously shorter than normal. As incoming orders need quick replenishments, whatever is finally sold is followed by quick openings of letter of credits and requests for immediate shipment. The no-stock, just-in-time policy is now also guiding purchasing programmes in Asia. This is not much of a surprise because not holding any stocks and buying late has been a common practise for almost a year and even longer in long term cycles. This is hardly a success story or a real mistake and it does result in tanners forgetting the raw material market risk. Sales made during the week were not dominated by any market in particular. A fair round of interest in light material was felt again as was some interest in heifers from shoe tanners and overseas car upholstery tanners who added to the sales. Dairy cows were not the focus of interest this week and few inquiries followed. With regular sales of bulls already out of the way the item met limited interest. On the international price structure only dairy cows and heifers are attractively priced whilst bulls are not a bargain for regular buyers of competing origins. The price issue emerges here once again and prices simply are not moving. Fractional increases in Europe are being paid but most are fully absorbed by the increasing cost of transportation. At an international level prices remain where they have been for many months, with the gamble on currency rather than on hides. The deal of the week was to sell the US dollar mid-week to cover a favourable level and, with a bit of luck, cure the price problem with currency. Adequate margins are still unobtainable at present. There are reports of traders’ interest in European origins which cannot be exported directly to China. With the approaching APLF in Hong Kong some players are obviously trying to arm themselves with hides to have a talking point at the show. With the market not moving at all, the only real target for trade hides are sellers who have to leave room for a margin as they lack direct shipping opportunities. It also seems that quite a number of stocks of ‘export material’ are around looking for a home. With global tanners getting increasingly quality conscious, it will be interesting to see how and at what price these hides will find homes with a number of clients who still remember the experience they had last year.
The kill: Falling down at the moment. During the week the previously steady slaughter numbers dropped, possibly due to the cold and icy weather and road conditions. We expect the kill to remain steady but to show a slight falling trend. In any case, we are nearing the end of March when a lot should be decided regarding the future.
What do we expect? Tensions are on the rise. Lower supply is pushing the optimists while continuing price pressure on leather and rising material and production costs are the arguments of the pessimists. There is still no short-term winner in sight so we believe we are staying where we are.
|
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 |
€ 1.45 |
Steady |
|
|
25/29.5 kg |
27.5/28.5 kg |
22/27 kg |
25/26 kg |
€ 1.33 |
Steady |
|
Dairy cows |
15/24.5 kg |
22.5/23.5 kg |
13/22 kg |
20/21 kg |
€ 1.40 |
Steady |
|
|
25/29.5 kg |
27.5/28.5 kg |
22/27 kg |
25/26 kg |
€ 1.28 |
Steady |
|
|
30/+ kg |
33.5/35.5 kg |
27/+ kg |
29/31 kg |
€ 1.18 |
Steady |
|
Bulls |
25/29.5 kg |
27.5/28.5 kg |
22/ 27 kg |
25/26 kg |
|
