Courtesy of Friedrich Sturm GmbH & Co. KG

Nothing other than the expected extremely difficult market situation. The present prices paid at the abattoirs are unobtainable and every deal is just a fight to minimise losses. Demand was relatively slow and the business concluded was primarily with the regular buyers. These were fighting to keep their purchasing levels as low as possible in the present market. So, bulls were again the easier part of the business with at least demand allowing sales. However, from the recent surge in prices only one third – if one was lucky – was absorbed by the buyers. In all other categories (cows and ox/heifers) buyers have put a hold on prices and also the Asian activity on dairies dried up with asking levels surpassing the $50 mark.

Several larger sales of dairy cows were reported into Italy, but at levels that were hardly any better than the prices we seen mid May. So, here the losses are fully absorbed by the hide processors. We have to consider that the market is still divided into the Asian and the European business and the situation of the majority of European tanners is significantly worse than their Asian counterparts

During a trip to the Mediterranean this week it became obvious that the depressing retail markets in Central Europe and in particular in Germany are causing many tanners a big headache. Shoe tanners report an order decline of up to 30% due to the poor consumption.

Those tanners who traditionally focus on this market are not only depressed by the reduction in sales but also the bleak outlook as they fear that retailers are not able or very cautious to replenish inventories for the next season. Whoever is still enjoying good business is fighting with present raw material prices as no one expects to increase prices for the next season to sufficient levels.

European car sales released this week were also depressing with a decline up to 10% in total and only one premium brand (BMW) was able to show reasonable gains. Even if everyone says that the penetration of leather and the export sales of cars is outpacing the declining numbers, we have seen already in the past that the supply chain was more based on price points rather than on real sales and so things have to be watched even more carefully than in the past. Everything continues to be export orientated as not too many are particularly optimistic for the near future of Europe.

Total sales of hides were just about sufficient with most interest and sales being seen in bulls or lightweights. With the weaker US$ European hides are not anymore particularly attractive in price and are consequently not filling the gaps overseas as they used to do since beginning of the year.

The kill: The kill remains extremely low and light. Not really unusual for the season but a bit frightening for the months to come as we only start the school holidays end of this month and so one has to wonder what we still have to expect. There is hardly anyone who expects any improvement until end August.