What happened last week: Last week it became apparent just how strong the currency grip on the market is or at least on the market sentiment. It is probably fair to say that well over 50 % of the leather business in Europe is somehow influenced by the movement of the US currency, with not only the exports of hides and leather affected but also the imports on an almost real-time basis. The slump of the dollar by over 5% since the first week of February has had a powerful effect. In the past weeks the European hide business was busier with supply issues than with a fundamental analysis of the sales markets. Political and structural disputes between processors and tanners over the future of the hide operations have given the butchers the upper hand once again and price negotiations with the abattoirs were loosing to the real market world. The weaker dollar and the downturn in the overall market interest, combined with consistent price pressure, have brought many players down to earth and we expect market optimism to fade further as this week progresses. The global market remained entirely unimpressed by potential slaughter reductions in Central Europe, quashing all hopes for an improvement in the leather business. The situation therefore continues to be one of hide prices suffering from the increasing cost of related production, keeping the market locked in a price frame now unchanged for nearly half a year. This applies both to prices in the dollar and in the euro, and a return that has now dipped well below the average following the latest dollar exchange rate. There was a fair amount of interest and demand last week but not very much real business. A reasonable amount of bids and interest had to be turned down because of the decline in the US currency, while bids from Europe proved far more isolated and much easier to handle as they were closer to the sellers’ ideas. Sales in total were sub-normal and prices for cows showed a weak steady trend while other types were steadier. The lighter material continued enjoying a demand but the excitement here is also starting to fade and activities are starting to normalise.
The kill:The story of the week was the sharp drop of the kill of bulls. The end of February was the breaking point for the subsidies when the kill reached a several-day-low of almost 70-80 % and whilst it is slowly recovering it will take quite some time before it reaches a normal level again. The kill of cows remains at normal seasonal levels. With the Easter holiday approaching we can expect to lose volume.
What do we expect? This week will remain difficult. The very low US dollar from the end of last week will be weighing on overseas sales. In Europe the main focus will be on abattoir buying before a new round of consistent and regular sales takes place. The general situation will remain completely trapped for reasons stated above. As the market does not allow for any substantial price movement the eyes will now turn to the APLF, held at the beginning April, in the hope to find more indicators. We hardly believe that the market will be unleashed shortly.
|
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 |
Weakish |
|
|
25/29.5 kg |
27.5/28.5 kg |
22/27 kg |
25/26 kg |
€ 1.28 |
Weakish |
|
|
30/+ kg |
33.5/35.5 kg |
27/+ kg |
29/31 kg |
€ 1.18 |
Weakish |
|
Bulls |
25/29.5 kg |
27.5/28.5 kg |
22/ 27 kg |
25/26 kg |
€ 1.52 |
Steady |
|
|
30/39.5 kg |
|
