What happened this week: Slowly but surely the market is returning to the normal seasonal activity. After a very quiet September, where selling was a true challenge and without the regular customer base the month would have been a non-event, inquiries and sales volumes are starting to return to normal seasonal levels. Side leather tanners continue to be the front runners and sales of bulls and ox/heifers dominated this week’s activity. The return of the Asian tanners was also positive as a reasonable amount of cows was sold. This cannot yet compensate for the poor September sales but it is at least a start. Interesting is the fact that the split credit seems to be playing a lesser role because most of the interest focused on lighter weight cows which generally offer a better yield and a lower split credit. Hence, tanners ended up paying a higher price per piece. We did not have any final results from the fair in Highpoint but various sources mention that leather buyers in the USA have an interest to place finished leather orders in Italy and pull some of their business out of China again. It will be very interesting to follow this development at the trade meeting in Bologna the forthcoming week, as it will certainly provide us with more exact information. In shoe leathers the trend to improve quality upper leathers is becoming more and more evident. Interest in medium and higher quality raw materials is increasing and, consequently, benefiting our product range. The better news from the market activity has not yet been reflected in better prices, quite the reverse. The pressure on raw material prices remains high and negotiations are tougher than ever before. Buyers of cowhides in Italy and Asia mainly are trying to bid down raw material price levels to the absolute minimum at the beginning of this new production cycle and keep them at their lowest as long as they can in order to protect their calculations. This is the normal trading pattern at this time of the year. The automotive business is causing some worries, especially in Europe. GM has announced that about 10.000 jobs in Germany will be lost, resulting in immediate strikes. The labour dispute at Volkswagen is not yet settled either, leaving a high risk of a strike. In general, car sales are not satisfactory and so the production of automotive leather is stuttering. This might also eventually have an influence on some of the European hides. Apart from the total volume of production, one can see more competition as a result of the shift of sourcing in this sector. The kill: Last week we were still quite positive but this week, all of a sudden, the kill of bulls dropped sharply while the kill of cows continued in the seasonal pattern. Cattle prices are blamed for the present situation but we think this will only be temporary. What do we expect? We have good reason to believe that activity next week will be reasonable. There is a certain need to replenish inventories and tanners like to cover theirs in advance. Prices will remain a battlefield but it seems that the trading range remains intact and we expect variations to be limited. The situation in the auto industry remains unknown as do its consequences for the market.
|
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 |
€ 1,50 |
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 |
€ 1,45 |
Pressure |
|
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,38 |
Pressure |
|
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,23 |
Pressure |
|
Bulls |
25/29,5 kg |
27,5/28,5 kg |
22/ 27 kg |
25/26 kg
|
