What happened last week: Although holidays are on everybody’s mouth, sales activity was more than acceptable last week. Another round of buying from China was noted as well as some interest from Italy for prompt shipments. Most of that interest has been satisfied and selling prices were almost on asking levels. A few cents may be missing but revenues today are still much better than they were a few months ago. The low slaughter remains the biggest challenge at the moment. Even when sales revenues look reasonable, the rising cost per piece, due to the low slaughter, continues to burden calculations. Across Europe we hear that the kill is about 25% to 50% below the average level expected for this month. This is obviously making butchers pretty ambitious regarding the value for their main by-product. With more and more abattoir companies entering the hide processing and marketing, the position of the traditional catalyst between beef and tanning industry is continuously weakening and losing more and more of its function. As a consequence, we currently see more discussion in the trade about the restructuring process rather than the hide market itself.
Looking at the market fundamentals, we still believe that the decent market and selling activity seen over the past month should not be overvalued. The revaluation of the US currency has offered the European sellers an opportunity to obtain adequate prices and to be globally competitive again. The premium qualities are still supported by steady demand from the premium end of the leather market. However, looking at the more economical market section, we still believe that the present market conditions remain very fragile and entirely currency driven. As everybody knows, there is more than abundant supply of low quality material around the globe and only a minor price correction in the USA would immediately increase pressure on our market again.
Despite the low kill, there is only a raw material shortage in the small top end of the market. In Europe we have maximum two more weeks of trading activity and shipments will dip substantially from mid July until the end of August. So, everything depends on September activity from Asia. Looking at the recent contracts booked, shipping times have changed from prompt to August/September, which means that the pipeline here has also been filled in the meantime. Consequently, we now have to wait and see if the buying round from some big names in China will be determining the market psychology, logic and ratio. We will also be looking a little bit further ahead expecting a slowdown of the interest from Asia as the immediate needs are satisfied. This would then be parallel to the situation exactly a year ago.
The kill: Nothing new is to be added to what we had already said. The numbers are very low and there is no hope for a short term change. The market is certainly in no danger from the supply side in Europe.
What do we expect? Recent terrorist attacks in London and record prices for oil might increase worries about the economical prospect for the economy in the second half of the year. Sooner or later the tremendous inventories of low grade material will have an effect on the markets. In the coming weeks, however, we expect the trading to enter the usual coincidental activity of a holiday season. High quality products should stay fairly firm. The rest will remain steady.
|
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 |
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 |
€ 1.52 |
Steady |
|
|
25/29.5 kg |
27.5/28.5 kg |
22/27 kg |
25/26 kg |
€ 1.32 |
Steady |
|
|
30/+ kg |
33.5/35.5 kg |
27/+ kg |
29/31 kg |
€ 1.16 |
Steady |
|
Bulls |
25/29.5 kg |
27.5/28.5 kg |
22/ 27 kg |
25/26 kg |
€ 1.58 |
Steady |
|
|
30/39.5 kg |
36.0/37.0 kg |
24/34 kg |
31/33 kg |
€ 1.46 |
Steady |
|
|
40/+ kg |
45.0/48.0 kg |
34/+ kg |
38/40 kg |
€ 1.38 |
Steady |
|
Thirds |
15/+ kg |
25.0/27.5 kg |
13/+ kg |
24/26 kg |
€ 1.10 |
Steady |
|
Thirds bulls |
30/+ kg |
38.0/40.0 kg |
|
