What happened this week: At the end of the day activity did not slow down as much as expected as there were still quite a number who were open to buy in the market. Buying was selective and there was no wall of interest, but there was enough to clear the week’s production again. Buyers started the week by testing whether sellers were willing to accept bids, but realised that their preferred sources were reasonably well sold and were not willing to take any further offers below their asking levels. So, some decided to step out and others preferred to have their orders covered and were willing to spend a little more than expected. In the end, most of the regular buyers couldn’t complain as they must have got a fair average price over last season and have also a secured supply from their regular suppliers. For the others, gambling against the market trend of the past few months must have been an expensive adventure. This may not only be true regarding the price, but also with regards to the raw materials that they had to settle for in order to cover themselves.

However, all this is history and the interesting times lie ahead of us now. If this were an average year, the coming weeks would be quiet as far as trading was concerned because Asian tanners are welcoming visitors (suppliers) and this they normally do so after having secured a comfortable raw material position. It is not Asian (Chinese) style to sit at the table with a weak hand of cards. Since the timing is decided by the dates of the APLF in Hong Kong it would be a surprise if buyers are sitting at their desks anxiously awaiting sellers to come. However, we have only two options: either they have played their cards right and are now comfortably covered or, leather orders have now really come in at much higher levels than anticipated and they are running just behind with their raw material coverings. A great deal points to option number two because requests for shipment are still very short and this does not make anyone believe that buyers are sitting on a comfortable raw material inventory. While this is definitely the case for European buyers, we could be misguided when it comes to Asia.

Maybe there is some truth in the assumption that some of the purchasing and shipments are also related to the customs books and the tax regulations imposed in China. Consequently timing could become an important issue. However, short term, the risk must be limited because Chinese tanners know everything better than we do and therefore why should they push things forward without any need. The week eventually ended with another round of interest and sales of dairy cows. The main interest was again for the heavy end. The favourites over the last few months such as ox/heifer faced more price resistance and less enthusiasm than expected while bulls remained steady with most regular users pretty well covered. Prices were on a firm and steady ground and almost full asking levels were achieved. With the US$ trading at the high end of its present range revenues were no less than expected.  

The kill: Moderately declining. The big question now is if the export ban on Argentinean beef will mean anything for the slaughter in Europe. Most likely not, as it might be substituted by other origins rather than local supply. Consequently, we expect low seasonal slaughter levels to continue for the weeks to come.

What do we expect? The market remains on firm and stable ground and it is hard to believe that this is going to change in the weeks to come. It seems that most buyers and sellers have settled their business for the time frame up until the end of April and no major action will be required until mid-April. Sellers at least are sitting comfortably and tanners that are still not covered for this period will face problems finding what they need.

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