What happened this week: Who actually cared about the hide and skin market this week? Actually, nobody did. With the breathtaking situation on the financial markets this week most players preferred to stay on the sidelines and hide away rather than think about buying and selling hides.

This situation with the devastating conditions on the financial markets as well as the threat of a meltdown on the stock markets around the globe, were the dominant factors — until Thursday at least. In combination with the upcoming holidays in Asia and the financial problems in the Mediterranean tanning industry, the fundamental conditions were neither easy nor positive this week.

The market conditions need further clarification, so that players can regain some confidence. Uncertainty, mainly about the financial situation in great parts of the industry, has also increased after the financial turmoil on the markets, as nobody knows how banks will react over questionable credits with these increasing problems.

Anyway, although the mood is poor the majority of the industry is still working as normal and consequently, in most parts of the industry, business remains quite regular. The final results of the trade shows in Cologne and Riva have been assessed and overall the results were not negative — at least as far as impressions were concerned. In the upholstery market quite a bit of ‘retro-fashion’ was seen and bright colours, or better put, all shades of white dominated the IMM exhibition in Cologne. Apart from the general fashion for colours and designs, this trend will also support lower grade materials as they usually need more finishing in order to achieve brighter colours. This is another argument for cheaper raw material prices and a reflection of the massive pressure on finished products.

The biggest problem for our market is, however, the fundamental price level. Most, if not all, hides around Germany are cheaper and this is making it increasingly difficult to maintain positions and if we don’t see a strong rebound in prices soon it will be difficult to defend a position at all. The main problem in this respect is the abattoir price-level in the area, which is fairly overdue another significant adjustment in order to bring it into line with the market realities around us. In terms of selling prices, these have already gone most of the way already, but this now needs coverage at the abattoir door.

Sales during the week were less than average, but some limited volumes did move again. Dairy cows and heifers were in the foreground again and even a handful of bull hides changed hands. As long as sales were directed at the overseas markets, prices again depended pretty much on the timing on the currency markets. With movements of more than 2% per day sometimes the currency differences are probably now more important than the hefty fight for prices.

The kill: Presently a rollercoaster ride. After a strong start to the New Year the numbers have now dropped significantly and are about 20% down against the beginning of January. Apart from general complaints from butchers about margins, we don’t see any specific reason for this. With the carnival season ahead of us we don’t expect much better productions in the weeks to come. 

What do we expect: There is still very little that could stimulate the market at the moment. There is still no shortage of material and only a lower kill might ease the pressure a bit. The spread between various European markets still remains too high and needs to be narrowed. Everybody is convinced that prices are on the low side of the trading range, but so far all hopes of a turnaround have been disappointed and we can still not find an argument for a change in the coming weeks unless big players have the courage to step into the favourable market to absorb material.

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