German Perspective—16.09.08
16/09/2008
What happened this week: Most people have returned from their trips to Asia and some of the daily routine has returned for many. Now is the time to sort the trip out and work on the results of the trip.
As far as business is concerned activity still remains in low gear and the biggest event of the last week was most probably the continuing rise of the US dollar against the euro until Thursday, before falling back to levels from beginning of the week.
With a rise of around 15% in a month, we might have expected a run on European hides because of the changes in the exchange rate. However, although interest for our hides has been better this week and, in particular, lightweight material and males, decent interest prices were just about on a level in dollars to trade on today’s levels.
Serious windfalls from the currency cannot be generated any more and this reflects how much European hides were overvalued during the summer. However, the situation is bad news for European tanners as the fall of the euro has taken a lot of pressure from the market for the moment and the hopes of further and substantial declines have faded.
On the other side of the coin tanners are also benefitting from the level of the euro because their competitiveness is improving on the export markets. Although we are not sounding overly enthusiastic, sales have definitely taking advantage of the situation this week, and a number of clients have considered to look into purchases again, albeit moderately.
Even dairy cows saw a flurry of interest, although well down on prices in dollars from a few weeks ago. However, the firmer dollar has absorbed most of the decline and so dramatic losses on unsold stocks in Europe have been avoided for the moment.
Ox/heifers, calf and kips and bulls have also found decent interest, and our prices are sheltered nicely again by the price levels in the US.
In general one could say, that activity has picked up again a bit, but this is not a big deal considering how slow the summer was. We found it interesting, that interest for skins and also for splits is picking up; at least these segments show decent stability.
For the next few weeks, there will be a lot of finished product shows—for furniture, shoes and leathergoods—and they should give further indications for the coming months.
While falling oil and commodity prices are good news for manufacturers, the news is less good for the countries producing oil. Many see the boom in the markets in Russia coming to an end.
Despite the moderate improvement during the week we are still not basically seeing any major reason for a market turnaround. Demand is still just about so-so, and in many hide categories there is still a lot of unsold inventory awaiting clearance. This applies in particular for upholstery hides. Consequently we have to wait and see the general results from these trade shows, and see what response tanners get from their customers who are making up their minds about what to put onto their shelves in the near future.
The kill: The kill has steadied at the better levels seen already in recent weeks, although weights have still to increase, making accurate calculations difficult. Weather is still excellent for September and so we don’t expect much change in the kill for the weeks to come.
What we expect: Some people are dreaming already of a better market and an end to all their problems. We think it is far too early yet and we would not be surprised if the pressure persists. If the dollar falls again optimism could fade quickly. A lot of fundamental problems including cash-flow issues are not yet sorted out. So, the market should be steady, but no more, next week as we wait to see which direction things are going to follow.
| 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 | Steady |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1,30 | Steady | |
|
Dairy
cows |
15/24,5
kg |
22,5/23,5
kg |
13/22
kg |
20/21
kg |
€ 1,40 |
Weakish |
|
25/29,5
kg |
27,5/28,5
kg |
22/27
kg |
25/26
kg |
€ 1,20 |
Weakish |
|
|
30/+
kg |
33,5/35,5
kg |
27/+
kg |
29/31
kg |
€ 1,00 |
Weakish |
|
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,45 | Steady |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1,30 | Steady | |
| 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 | € 1,00 | Steady |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1,00 | Steady |
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