What happened this week: The market is now watching developments in the US hide market with great care. The situation over there looks pretty vulnerable with Asian tanners now seeing their long-awaited chance to drive the market further down and to return to acceptable margins whilst sellers are finding it difficult to accept lower their prices as they are still convinced that leather business is good and hide demand should be strong. For the EU market the situation has not changed much (yet).

With the kill in a reverse trend to the USA and most sellers pretty well sold, the need to move is pretty small at the moment. Tanners are throwing arguments of the weaker US market into the ring, but with not much success so far. Only the extra heavy hides have undergone any correction whilst most others are still holding pretty well and only minor price adjustments have been needed. The stronger US$ even made it possible to make minor price concessions in the overseas markets without hurting the euro returns too much. Interest focused mainly on dairy cows and low grades again and prices were almost completely steady. Ox/heifers and bulls have had a more difficult time to find price agreements with the headwinds they are facing from the US steers market which is no longer sheltering European price levels. However, with the reduced availability and kill, the limited interest is still enough to clear productions within very small price variations. One interesting point was that some of the pressure on the extra heavy continental hide market seems to have lifted and the traditional seasonal fall in supply is assisting in achieving a market balance—at least for fresh material. We don’t believe, that this going to affect prices in the short-term but it is going to ease some of the stress on sellers and, with the recent market correction, the price structure between the weights and grades seems to be more adequate now and prices for heavy material should now start to swing with the general market trend.

We are still hearing of some difficulties in the veal/calf skin market as it seems that there are still a few unsold lots around, mainly in the heavier section. With the low season and prices still at pretty high levels it could well be that they will continue to struggle and as the summer holiday season gets closer it is only going to get more difficult still. So, even though our markets seem to be in a reasonable balance, Europe is not the trend setter and most of the global markets are still searching for a safe bottom. Under normal circumstances this should still take a few weeks and tanners seem to be in a position to let the market slide moderately in order to replenish their inventories with more comfortable margins in the early summer. Until then any market support can only be achieved from the currency situation and other than this the market should remain in the typical spring agony. 

The kill: At this time of the year not much can be expected. The long-expected rain is allowing the grass to grow whilst holidays spread over the month are keeping the kill on the very low side. Weights are continuing their seasonal descent and this market pattern will remain until sometime in August.

What do we expect: Supply is keeping the market under control. From the demand side we fail to see much likely support for the market. If the international markets continue to weaken, support for our market can again only come the currency markets and the US$ rallying again. With not many hides accumulating, a weak/steady market trend seems to be the most realistic assumption for the coming weeks and there is still little to indicate a major and larger market move.