German Perspective 21.03.08
25/03/2008
GERMAN PERSPECTIVE—21.03.08
What happened this week: It was another pretty quiet week. At the beginning of the week the market was still shocked by the weak US dollar and the turmoil on the financial markets. The Easter holiday has also left its footprint and all this has had an impact on market activity.
Asian customers are also remaining on hold as they are expecting their suppliers to visit them either during their trips scheduled for the next two or three weeks or to meet them at the time of the APLF exibition in Hong Kong.
Within the trade most players are wondering if the market has now finally found a bottom and if prices are now cheap enough to offer a chance for a rebound. As usual opinions are divided, with tanners on one side and most of the hide suppliers on the others. We have heard from some European regions, that slaughterhouses are already trying to lift prices again. We don’t know how much success they have had, but we would be surprised if it was any.
As far as sales are concerned, business never comes to a standstill and again some bits and pieces were sold all over. Listening to discussions in the market, we sense only speculative arguments and not much that we would rate as strong fundamental and rational reasoning as to why this market should turn around.
The main topic is always supply. With the expectation of lower slaughter—in particular for heavy material—into the spring, and rumours that the inventory of tanners in Europe are not very large, there are hopes that the market could escape form excessive supply, and that demand could again become the driving force.
In the end, these theories should always take into consideration the valuation of German hides against the alternatives. For many grades, buyers are still finding options that allow them to skirt round the currency issue. In today’s uncertainty in financial markets, European tanners—if they can—still prefer to protect themselves by buying on a US dollar basis, rather than buying in Euros and possibly selling in dollars overseas.
The leather business in Europe seems still to be stagnant and, in particular, in southern Europe there is still not much positive news to be heard. There is still fear in the market that more companies could fail in that region.
In the meantime we are slowly reaching the final lap of the production season. Although the experts believe that the European economy is not going to be touched much by the problems of the US economy, it would be a surprise if consumers were not watching their money carefully, not to speak about the increased prices for food and energy that are leaving them less to spend anyway.
So, any positive news from the demand side must come from the emerging markets and how long they can compensate for the problems in the old economies needs to be seen. Selling prices this week dropped again a fraction, but with the small volumes involved this cannot really be reprensentative.
The kill: The kill was steady with some interruptions owing to shorter working weeks this week and next. Pretty cold weather is expected, so beef consumption should still remain steady.
What we expect: For the next two weeks we will be watching Asia. We will only become more positive if we see the dollar rising, or if demand goes up soon. People can make their own guesses about what will happen in the near future. We remain pretty conservative about this market. We have reached lower levels and the downsize risk seems to be limited, but we have still no reason to expect prices to increase soon.
| 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 | € 1,45 | Weaker |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1,33 | Weaker | |
|
Dairy
cows |
15/24,5
kg |
22,5/23,5
kg |
13/22
kg |
20/21
kg |
€ 1,46 |
Weaker |
|
25/29,5
kg |
27,5/28,5
kg |
22/27
kg |
25/26
kg |
€ 1,32 |
Weaker |
|
|
30/+
kg |
33,5/35,5
kg |
27/+
kg |
29/31
kg |
€ 1,15 |
Weaker |
|
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,50 | Weaker |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1,40 | Weaker | |
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1,20 | Weaker | |
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1,05 | Weaker |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1,10 | Steady |
Share this story:
