What happened last week: It is quite difficult to describe last week, as the sentiment differed from the hard facts. It certainly left a quiet impression by Friday afternoon but the contract book offered a different picture of satisfying sales numbers. Consequently, the missing quantities from the previous week have been mostly compensated for. Why then did the week offer such a poor impression?

This might be explained by the generally depressed mood in the trade and most parts of the upholstery tanning sector. Concerns are growing about the situation of many tanneries, particularly across Europe, and payments are falling due to the holiday season. As usual, structural problems are slowly surfacing and it seems that many of the problems that started in 2004 are now becoming evident.

The situation seems to be better in the side leather business, with the remaining tanning base still reasonably busy. Almost all sales made last week were concluded on Tuesday and Wednesday. A decent amount of interest in dairy cows from Asia was satisfied. Prices and bids were being actively exchanged, with a three dollar spread between the highest and lowest bid.

Negotiations, best deal picking and a bit of luck in the currency market allowed for adequate returns, the first time in many weeks. However, locking sales in remains a tough job. With the beginning of the summer, there is rising concern over where to place the hides when the European tanning industry shuts down in July/August. Rumours about stocks and increasing slaughter in the main producing countries in the Americas are adding to the general uncertainty.

On the positive side, many are arguing that the US market is maintaining a solid base and the firmer dollar is supporting prices from the euro zone. We relate a lot of last week’s sales in dairy cows as a security position against the US price levels. Most of them were not for quick shipments and so a security position for leather production in August/September might be built by some of the Asian upholstery tanners.

The males and heifers which had been the focus of interest over recent weeks were neglected, surprisingly perhaps, as the logic of substitution here would be much greater. Prices of European steers look very attractive against their US counterparts. Most of the European trade in males is still awaiting the outcome of the abattoir buying for June.  

The kill: In the coming week we have to expect a sharp drop in the kill. Beef prices have dropped suddenly and cattle prices are not at all favourable for the butchers. Beef consumption is currently falling to the seasonal lows and the holiday season also begins in the next few weeks. 

What do we expect? We don’t believe that the market is going to improve much. Supply will be an issue in males. If the kill drops according to the forecasts, bottlenecks will be guaranteed. This will hold the market tightly under control. Cows will be a lottery. With the Friday afternoon level of the dollar and another round of buying from Asia, the market should be well cushioned. However, there are still quite a few hides looking for a home in the next 8-12 weeks, so we should not get excessively optimistic.

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	€ 1.55	Firmish
	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	€ 1.50	Solid
	25/29.5 kg	27.5/28.5 kg	22/27 kg	25/26 kg	€ 1.30	Solid
	30/+      kg	33.5/35.5 kg	27/+   kg	29/31 kg	€ 1.16	Solid
Bulls	25/29.5 kg	27.5/28.5 kg	22/ 27 kg	25/26 kg	€ 1.55 < Share this story: Leatherbiz.com cannot be held responsible for content if the language setting is changed from English. The translations provided by Google Translate are automated and therefore might not be accurate and may contain incorrect, offensive or misleading language. We offer this facility as a guide only.