Friedrich Sturm Report - 26.01.07
What happened this week: There is still very little excitement in the hide market and the situation remains pretty much the same. Average quality hides of between 15-40 kg are still able to find a home as soon as they are offered and at the asking market level. Asking for more, however, has been failing. Asian buyers have been doing what they often do when their calculations do not fit with the right product; they just buy by price. This means in our case that they fix a price level and adjust the weight until it fits – at least on paper and in the buyer’s imagination. So lighter weight materials are doing better than heavier materials in the overseas export markets. This is lifting the prices for light weight materials fractionally while heavy weights continue to feel pressure without too much effect on prices yet. Extra heavies—over 50 kg—are running into a wall a bit as they have nothing more than their regular clientele and, with sufficient supply, they have become increasingly stubborn on price and seem to have succeeded in bringing prices down by 2-3%. In the end, all these movements are just minimal corrections as the prices for some material were inflated following some foolish market action in September last year and they are simply falling back into line. For anything more, the supply/demand balance is not yet swinging in buyers’ favour and so very little is happening. But the activity and the hype which continues to be reported from the
The kill is not good and there are not enough hides to squeeze suppliers, but the market dynamic is certainly not comparable to 2006. The firmer $ this week and a bit of overseas demand is still enough to cushion the prices. Interestingly this week, there was widespread export trader interest for anything that could average prices down. Low grades, light weights and odd bits and pieces were sought and it does not take a genius to recognise that either forward sales which went wrong in price needed to be covered or some of the ‘lower than average buying price’ bids were searching for cover. Whatever the reason, it was not garnished with a lot of success.
So, our attention has turned to the much better interest for lamb and sheep which has been a nightmare for so long. Various people are relating the returning interest for ‘garment skins’ not only to the high prices of calf and top quality skins, but also to the extended display of leather in the designer shows, which could eventually spill over into the consumer market. The firm market for wool might also play a role, but we are not bothered about the reason and we are just pleased that these items are starting to move again. So the only thing that remains a bleak spot is the worry about payments and tanners’ margins. There is no question that the majority of the tanneries are unhappy with their results and it is unclear whether this is merely a feeling or whether it is a real problem. Ignoring the signs could prove fatal.
The kill: There is nothing new to report as the kill is steady. We are missing approximately 20% of males in the mix and, despite the decent market situation, prices at the abattoirs are too high to reflect the real market. Since selling prices are not moving upwards, it is squeezing margins and this will be worse when the average weights fall again. For the moment, there is little hope for any immediate improvement.
|
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 |
€ 1.60 |
Steady |
|
Dairy cows |
15/24.5 kg |
22.5/23.5 kg |
13/22 kg |
20/21 kg |
€ 1.65 |
Steady |
|
|
25/29.5 kg |
27.5/28.5 kg |
22/27 kg |
25/26 kg |
€ 1.50 |
Steady |
|
|
30/+ kg |
33.5/35.5 kg |
27/+ kg |
29/31 kg |
€ 1.40 |
Settling |
|
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 |
