Friedrich Sturm Report - 01.12.06
What happened this week: At present, the currency market is more exciting than anything else by far. The continuing collapse of the value of the $ is terrifying exporters in Europe and Japan and the situation is reminding many of 2004 when we went through a similar experience until the end of the year. Whether the end of the story is the same this time, (a sharp recovery of the greenback after speculators took their profits and the outlook for the US economy had to be revised) will be confirmed some months from now. In the meantime, hide offers for overseas exports have to be revised once a day, if not in hours, to compensate for the decline in the value of the $. We can only be happy that the US hide market, or better said the global hide market in general, is still performing so well and has seen quite a few price increases in recent weeks, because this has cushioned some of the currency market developments.
However, on lighter weight dairy cows in particular, the net € revenues have still suffered and we would reckon that today’s calculations compared with those of some weeks ago end with a €1.50-2.00 decline in returns. Due to the general market conditions and the still comfortable sold position, few are taking much notice but they will have to eventually. Meanwhile, the market for ox/heifers and lighter and medium weight bullhides continues to be in reasonably good shape. Due to the price tags of US steers, their European counterparts still look attractive and are conveniently averaging price levels down.
If there is one good thing about the market, it is the fact that European bulls have found a much wider market base in Asia and are now at least an established alternative if the price spread is sufficient. In general, the market continues to segment even further. In light hides it can easily be seen. While there is still a shortage in hides in a range of around 5-15kg, overweight calf and kips are experiencing much stronger headwinds and the number of offers available from various origins for prompt shipments is high. They are just not affordable and the fact that the hides are now suddenly available clearly shows that they have been relegated from a number of tanners’ menu sheet. To get this material some months ago was almost impossible. This is not a surprise either. Looking at the prices people have in mind per piece you can easily find material that is more expensive than say a 30kg male hide.
We also believe that the market for overweight bulls is also pretty much balanced now. It may even go in the buyers’ favour sometime soon. Prices here had been pushed in the late summer for short-sighted reasons and this might have to be reconsidered this winter. So, one can find various examples here and there that the entire market is not in as comfortable a state as it might look from a very generalised position. Sales during the week were just about acceptable as far as males and heifers were concerned. Taking the bids on cows and waiting an hour to cover the currency killed the business.
The kill: The kill rose even a little higher last week and the effects of weather and the Christmas season can clearly be seen. Beef demand seems to be good for quality products and there is no reason not to believe that the present levels will not continue until Christmas.
|
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 |
€ 1.80 |
Steady |
|
|
25/29.5 kg |
27.5/28.5 kg |
22/27 kg |
25/26 kg |
€ 1.55 |
Steady |
|
Dairy cows |
15/24.5 kg |
22.5/23.5 kg |
13/22 kg |
20/21 kg |
€ 1.65 |
Pressure |
|
|
25/29.5 kg |
27.5/28.5 kg |
22/27 kg |
25/26 kg |
€ 1.50 |
Pressure |
|
|
30/+ kg |
33.5/35.5 kg |
27/+ kg |
29/31 kg |
€ 1.42 |
Steady |
|
Bulls |
25/29.5 kg |
27.5/28.5 kg |
22/ 27 kg |
25/26 kg |
€ 1.65 |
Steady |
|
|
30/39.5 kg |
36.0/37.0 kg |
24/34 kg |
31/33 kg |
€ 1.70 |
Steady |
|
|
40/+ kg |
45.0/48.0 kg |
34/+ kg |
38/40 kg |
€ 1.58 |
Steady |
|
Thirds |
15/+ kg |
25.0/27.5 kg |
13/+ kg |
24/26 kg |
€ 1.25 |
Steady |
|
Thirds bulls |
30/+ kg |
38.0/40.0 kg |
24/+ kg |
33/36 kg |
€ 1.25 |
Steady |
