What happened this week: In the last two weeks we have had a full selection mix of events. During the Christmas week trading activity was reasonably quiet with only isolated interest. However, the currency market was on a rollercoaster ride, taking along even those who followed it during their holidays. The drop to the record low of almost 1.37 at the end of the year has been corrected this week, returning to the situation from the beginning of December with the same conditions, market and problems. What has, however, changed is the kill and, as it often happens, the change was an extreme one. While the kill remained at record levels until the end of the year, meat plants have become almost idle since the beginning of 2005. Slaughter levels this week are, at best, at around 30% of the average December level. As far as salted hides are concerned, this has a limited effect as enough hides from the December slaughter are still available. As usual, it is the fresh hide supplies that are immediately touched but, fortunately, the first week of the new year has not been busy in the tanning industry because many in Europe were off on Thursday, which means that they were either closed for the whole week or at least since Wednesday. Consequently, not too many hides needed to be shipped. Next week the market should return to normality and some sales have been recorded in the last few weeks. While most of the European customers closed their books prior to the Christmas holidays, covering themselves until at least February, some of the overseas buyers and traders have been filling the gaps. Although at small volumes, dairy cows have found some interest and prevented the sales from being nil. While prices in the dollar did not look very smart in the previous week, the choice to wait to cover the currency has been rewarded and levels from early December have now been obtained. All this is, however, currency related as the market itself has not made any progress. Meanwhile, the meat industry already believes that their turn to raise January prices has come due to the low slaughter. Apart from the fact that there is no justification from the market, many forget that with the motorway toll system in place in Germany since 1 January, transportation charges are on the rise and lower numbers increase per unit cost. There is little news from the leather business front and little more is expected in the near future. Asian buyers are now starting to prepare for their annual holidays and there is little in support of the motion that more hides will be needed in the tanning industry in the near future. The kill: The first week of 2005 has confirmed all negative forecasts and expectations. Many plants have not killed at all or just on single days, hence hides arriving to the plants could receive almost individual attention from the labour. We expect things to improve slightly over the next weeks but nobody should be surprised if January ends with a drop of 30-40 % versus November/December. The number of bulls will be most affected. What do we expect? Business activity will now slowly return to normal. The firmer dollar will make offers more attractive and we can hope that tanners will show a growing interest to absorb some of the inventories still around. Buyers are also soon likely to realise that the one-way downhill race of prices seen over the past months has come to an end. We feel, however, it is still too early for a sharp rebound.
|
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 |
€ 1,35 |
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 |
€ 1,27 |
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 |
€ 1,50 |
Steady |
|
|
30/39,5 kg |
|
