German Perspective—30.09.08
30/09/2008
What happened this week: After some reasonable activity last week, business dried up almost completely this week. With the persisting deep financial crisis and the uncertainty surrounding the possible failure of more banks, the problem could eventually also make other banks outside the US fail. This is still weighing heavily on the market and the general situation.
How serious matters are can also be seen in the noticeable slow-down of payments and even top-class clients need today a discrete reminder that payments are due. This, in combination with the constant reductions of credit covers by the insurance companies, is making life even more difficult, on top of all the market problems we already have.
All this is making a fair judgment of the market prices and the situation pretty difficult. As bad as things may look today, there is still a selection of clients and manufacturers admitting slowly improving order books. They report that business is behind the budgets and not meeting the high expectations of last year for 2008, but their order books are still good enough to keep productions running in full. This is definitely the minority, but it is at least showing that not all has turned sour and some good accounts are still running successfully against the general tend. Let us hope that they can continue to fight the battle.
At least in our case, market and purchasing activity was coincidental at best. A number of inquiries were seen confirming that, at present levels, decent demand is out there, but most clients seemed this week not to have the courage to book larger volume and with the ongoing horror stories from other markets and the financial community nobody can blame them for this.
Consequently sales were merely limited to the sidelines such as low grades and light weights. In the regular material we haven’t seen much and the number of standard hides sold was very limited. There is certainly no pressure for anyone to secure raw material at present, but we all know that it will just need a small turnaround and change of the market tone to trigger a large round of business among all those who don’t want to miss the boat.
It is, however, hard to forecast such a situation for the near future. It is also true that there is still a jam in the pipeline for a number of hide types and origins, while. for several hide categories, tanners’ inventories are falling and the stocks have shifted to the suppliers—packers and processors. This is shifting the balance a bit and eventually tanners will need to replenish their inventory; existing stocks are going to be absorbed in production if they fail to replenish in time.
Worrying in this respect is still the sizeable stock of semi-finished material in the pipeline, mainly in the hands of the upholstery tanners. Many of them would probably like and need to fill their beamhouses, but the massive stocks of wet blue and crust built over the past months will not allow them to proceed. It is not a good idea to have too much money tied up when banks are also close to liquidity.
The kill: The kill was moderately lower last week. We don’t have any particular reason for this. Possibly it is the good and warm weather that is still keeping the cattle out in the fields and the farmer still holding on to them. This should continue to be the situation in the weeks to come, unless something changes.
What we expect: As we said last week, we live now from day to day and from deal to deal. There is no sign of any improvement in the situation in the short term. In the next weeks China will go on holiday, which will reduce activity even further and delay payments and letters of credit. So we can only hope that the situation in the financial markets settles to provide some support to the hide market and, eventually, deliver back the required confidence.
| 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 |
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 |
€ 1,00 |
Weak |
|
| 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 | € 1,15 | Weakish | |
| 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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