German Perspective—22.07.08
22/07/2008
What happened this week: A lot of last week’s momentum spilled over into this. The interest for males continued to be reasonably strong from overseas accounts and although the volume was not the same, there was again a satisfying amount of hides sold.
Prices remain under pressure and, with the US dollar being rather on the weak side, the currency market was no help in improving returns. However, looking at other European origins it seems, that it could have been even worse.
The interesting part of the story is, however, that a number of Asian shoe tanners have been speculating on a falling US hides market. With the US market still doing well for similar grades compared to some of the European ones and with the decent forward position the big packers are holding, it is obvious that some tanners were caught on the wrong foot and need now to find alternatives to bridge the gap, for time as well as for price reasons.
Although opinions are split on what would be a fair price for European hides, we think that buyers have done a good job to buy from there. Comparing prices we believe that European hides are today definitely the better buy—provided one can handle the technical challenges the hides offer when being integrated into a standard and industrial production of US big packer hides.
Anyway, the volume of interest and activity from the side leather tanners over the past weeks confirms the impression that the global consumer product business may be burdened by the general financial crisis and by rising food and energy prices, but shoes—as more of a fundamental need-to-buy—may suffer a smaller decline in the old markets.
At the same time the growth of consumption in the emerging markets is easily compensating for this.
For the rest of the leather business things are still not any better and it’s impossible to exaggerate the industry’s concerns about the near future. The market desperately needs, and soon, a positive signal that there is a future for upholstery and bag leathers.
We think it is probably more a question of patience now. Production never comes to a standstill and, after such a long time of agony and problems, we might still have a few months to go before things settle down. We may even see a number of rumblings in some sectors of the trade before it gets better, but at the end it is rather a question of how rather than if this will sort itself out eventually. The tanning industry usually recovers pretty well after raw material prices drop, over capacities are eliminated and some new and attractive products have been launched.
We are quite convinced, that the same will apply this time. Consequently, dairy cows are still in crisis and in the doldrums and for the next weeks one can find no silver lining. Prices throughout the week were more on the weak side of steady, despite decent interest. Anyone with a real interest in selling had to take what was offered.
The kill: The kill remains on the low seasonal holiday level. Weights are still low and haven’t yet seen any improvement. Starting today also the remaining northern regions are going on holiday and this will not support numbers at all.
What we expect: For the coming week any substantial change to the present situation would come as a surprise. There is still abundant supply of hides for the existing demand and we would need a few more strong weeks to change the fundamental balance. With hardly any cow market existing these days and the gap between males and females widening we can hardly believe that the activity in the male market will develop any support or floor for the female hides yet. Happy Holidays.
| 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 | € 1,40 | Soft |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1,30 | Soft | |
|
Dairy
cows |
15/24,5
kg |
22,5/23,5
kg |
13/22
kg |
20/21
kg |
€ 1,40 |
Weak |
|
25/29,5
kg |
27,5/28,5
kg |
22/27
kg |
25/26
kg |
€ 1,20 |
Weak |
|
|
30/+
kg |
33,5/35,5
kg |
27/+
kg |
29/31
kg |
€ 1,05 |
Weak |
|
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,40 | Soft |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1,33 | Soft | |
| 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 | € 1,00 | Steady |
Share this story:
