German Perspective 01.07.08
01/07/2008
What happened this week: Life isn’t getting any easier from week to week and this last one too was a tough battle against the market situation. We fail to see any change in the fundamental situation that we have been facing now since the beginning of May.
Hides that are related to upholstery, garment and, in part, also to bag leather production are struggling because of insufficient demand. The remaining hides and production are still doing better but also battling against massive headwinds from the consumer markets and the general global uncertainty about the economical future and the behaviour of the consumer in the second half.
With US hides still holding a significant price advantage over their European counterparts it is really difficult for European hides to be attractive to buyers these days.
The currency market is no help. The dollar lost quite a bit of its value again and if there is no change in the position of the central banks than one would not be surprised to see the dollar return to the previous record lows. This would definitely not help the situation in Europe either.
So far, so bad. In spite of the negative environment sales improved a lot. It is difficult to say if this was the result of improved market conditions or the result of significantly increased sales ambitions.
In the end we had a decent amount of interest and bids and we were able to convert almost everything into sales. This did help in numbers, but did not help much for the critical items which are still dairy cows. Only a small proportion of the interest was for cows and this was not enough.
Sales were done mostly for low grades, bulls and heifers, which were not the biggest headaches before. Anyway, one has to be happy to sell and move good weekly volumes these days.
Prices had to be moderately adjusted for cows, but for heifers and bull hides levels were almost steady.
We have to admit, that we do not yet believe that this is a turn for the better, just some much needed replenishment.
To make it an even more pleasant week there was also a round of letters of credit, which will allow a few more shipments into July.
The fundamental problems remain, however, and there was little positive news from most markets. Most tanners around the globe report declining orders and this is now also starting from the shoe production sector.
Bag leather producers in China are now hoping for a sharp improvement in business with the start of production for the winter season. However, nobody knows how global consumers, including those in China, are going to react to ever-rising food and energy prices and if the shopping bonanza for bags and shoes in many parts of the world could come to a halt (as it has already has for leather furniture). We are now entering the low season with holidays in the western world and China in expectation of the Olympic Games.
The kill: The kill remains pretty steady. Weights are still very low. In our part of the world the holiday season is commencing now and will peak in the first weeks of August. So, slaughter can now only be expected to fall to see the seasonal lows until mid August. This will not hurt anyone—or better said many might take this as positive news.
What we expect: We don’t think, that we have to change our views for the next weeks. Europe is closing now for the holiday season and it looks as though many companies there are trying to stretch the holidays out for as long as possible. There is no reason to have the tannery open when no orders need to be fulfilled.
The north of China will still be affected by the Olympic games and most others will be very cautious about the order situation and the retail situation. So, is there anything to improve and save the cow market? We cannot find many arguments at the moment.
| 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 | Soft |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1,33 | Soft | |
|
Dairy
cows |
15/24,5
kg |
22,5/23,5
kg |
13/22
kg |
20/21
kg |
€ 1,40 |
Weaker |
|
25/29,5
kg |
27,5/28,5
kg |
22/27
kg |
25/26
kg |
€ 1,25 |
Weaker |
|
|
30/+
kg |
33,5/35,5
kg |
27/+
kg |
29/31
kg |
€ 1,13 |
Weaker |
|
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,48 | Weaker |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1,35 | Weaker | |
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1,22 | 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 |
Share this story:
