Well, let’s start by discussing which correction we are talking about. The only real market reaction we have seen is on the heavier and higher quality end. All other grades have simply been fluctuating around the levels we have been seeing for a few months. Whether one is positive or not about the market, it cannot be denied that, across Europe, market pressure is incrementally rising and European origins that are mainly dependent on the Italian market are facing weekly rising pressure to move adequate volumes, regardless of price. This is leading to an accumulation of hides, probably for the first time in the last cycle. The situation for the medium and lighter weights may still be of little consequence, but in heavy hides the problem is mounting much more quickly.

Looking at this scenario and thinking about the calendar, it is quite difficult to feel a great deal of market optimism. As far as the domestic situation is concerned, fierce competition at the abattoirs and stocks in heavy material may lead to hopes for steady selling prices across the board. However, extra heavy hides, which are predominantly aimed at the European industry, are still not finding enough demand to be absorbed in the quantities in which they are slaughtered. Maybe we are too pessimistic, but it is hard to find any reason to change this opinion.

The rest of the market remains in a normal condition. Interest and bids, particularly from Asia, never dry up completely and this week there was enough demand for dairy cows to choose from. Although tanners are bidding aggressively, prices remain at the same level, moving by just 50 cents or so. Surprisingly, some interest and sales for ox/heifers was also generated, but only with non-regular clients and so the value of this for the market analysis is at least questionable. The interest for standard dairy steers from Asia is far less then it has been so far this year. The reason is the remaining uncertainty about the progress of the US steer market, where most Asian tanners either want or fear a further decline in prices. As we all know, Asian tanners are only good buyers in a rising market. The modestly firmer $ lent a helping hand toward the decline in price revenues again. The end result for the market this week remains: the problem for extra heavies is not yet solved, while standard grades are stubbornly fighting against a weaker trend.

The kill: The kill is normalising a little as most of the holidays come to an end and we now have full weeks ahead of us. In Catholic areas there is still one holiday to come and then full slaughter weeks will return. At present, we are seeing many more males in the slaughter mix which is helping to protect against the usual supply bottlenecks of fresh material at this time of the year. 

What do we expect: There is still little reason to expect a major change in the price structure. Neither buyers nor sellers are willing to move in either direction, so levels remain fixed without a real justification of trading volumes. Extra heavies are still not looking good and should adjust further.

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