German perspective 15.04.08
15/04/2008
What happened this week: Actually it’s hardly worth bothering about a report this week. It is already a tradition that the week after the APLF fair in Hong Kong the market is almost in agony. Asian buyers are exhausted from the loads of visitors they have received, and suppliers are trying to sort themselves out after the return to their desks. As a result market activity remained in low gear. Sales were again rather coincidental and currency remains the most critical factor. The US dollar fell to new record lows and continues to fluctuate with a high level of nervousness. There is speculation that the greenback could go into further freefall before Central Banks or policy makers are able to intervene.
In the end most market players are going to have to accept that European hides in many cases are still overvalued. Many abattoirs, but also hide suppliers, are stubbornly ignoring the real facts and price structures of the global hide and leather market. The repeated arguments of lower kills and the present low price levels (in euros) are not justifying the present levels within the international price grid.
So, we need either for dollar prices to climb or for European prices to adjust to be able to return to some kind of price-balance. In the upholstery section most tanners overseas or in Europe are reporting fatigue in the market with orders and colour instructions falling behind their expectations. This cannot actually come as surprise as sooner or later the higher prices for food and energy had to hit consumer spending everywhere.
This in combination with the uncertainty about the general situation of the global financial markets is starting to weigh more on the general sentiment of the consumer and producers are also complaining increasingly about order books that are getting shorter; customers are committing less in advance and in lower volume. This is starting also to work back into the pipeline and even the regular programme buyers are constantly delaying their final decisions to extend their regular commitment for raw material supply.
So, the situation can actually be described as pretty sensitive and fragile. Sales were again a reflection of this. As decisions were delayed, the weekly numbers added to nothing spectacular, but finally to quite satisfying figures again. While cows were on the sidelines over the last weeks they were the leading grades this week. Calculations remain pretty painful with the weak dollar and there is hardly any pain-relief expected soon. Prices were consequently again moderately deflated. While about steady in dollar terms, net returns were again between 1% and 2% lower for the grades sold into Asia.
The kill: Very little change as far as the kill is concerned. The pretty poor and cold weather seems still to support beef consumption and is keeping numbers slightly above the expected average. Weights are in a moderate descent.
What we expect: Opinions are still different. While some insist that market conditions are stable others remain a bit more pessimistic-at least for European hides. Also we have to admit that it is hard not to be extremely prudent. It seems, that a decent part of the tanning industry-at least in Europe-is not in a particularly good state and with little hope for better leather prices and the seasonal downturn of the leather business looming we find it pretty tough to draw an optimistic picture. Apart from the price for hides one has to be concerned for the spring and summer.
| 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 | Steady | |
|
Dairy
cows |
15/24,5
kg |
22,5/23,5
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 |
€ 1,30 |
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 | Steady | |
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1,05 | Steady |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1,05 | Steady |
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