German Perspective—25.11.08
25/11/2008
What happened this week: The market is drowning in chaos and confusion. Hardly anyone still has a clear view of the way forward and, for many, the situation at the moment is no more than a race to the bottom on prices.
For those who were still managing to keep their heads up, the situation has become almost impossible. The biggest problems is that there is no control any more, and neither buyers nor sellers seem to have any kind of straight opinion; this is leading to the present chaos in the market.
First of all buyers must have the impression that there is unlimited supply of almost every hide type. This is reflected in the isolated sales we have seen of top-quality European heavy hides, but it is not reflected in the real market. Why not? Because we don’t think that you can buy real volume at these prices that tanners now dream of.
And this is the real problem today. With all markets panicking, there is no reasonable relation between quality and price any more, or between the different origins and hide types around the globe. Price levels between the various kinds of hides you can buy have become so compressed that anything below the top grades looks pretty stupid at the prices that are quoted.
The logical consequence is that either the surplus on offer across the board is so high that only top quality is enough to satisfy global demand or we have a classical overreaction and there’s going to be a return to sensible spreads pretty soon.
This is certainly the impression one got during the week because a number of tanners quickly tried to bid aggressively and in volume on the already discounted prices that were circulating the marketplace.
Some of them got pretty excited when they realised that there was not so much product pressure on the market that sellers would even look at some of the bids coming in. However, for the time being, in keeping with the general market environment, tenants have now got some idea in their mind of what is leading their market opinion.
Outside the German market hide prices were almost in complete freefall and in almost every market sellers were falling over each other to lower prices. As a consequence, even the last honest buyers around the globe started to complain about existing contracts and more and more information was collected about buyers trying to renegotiate existing agreements.
While this is bad enough, it is even worse that most suppliers are even entering into this kind of negotiation. We have destroyed all kinds of honesty and normal trading attitudes for a long time and the day when the market does turn around again we will see suppliers taking revenge; the trading morals will be affected for a long time and this not for the good.
Sales during the week were pretty reasonable for bullhides until Thursday. Good demand and almost steady prices eased a bit of a pain from the cow market. By Thursday afternoon and Friday a lot of the fun was over, with tanners reacting to the price turmoil in many overseas markets.
The kill: The kill has substantially improved and is slowly returning to the levels one would expect for this time of the year. The deteriorating weather conditions and the upcoming holiday season should most likely boost slaughter numbers in the coming weeks.
What we expect: We wonder what can stop the chaos at the moment. And so we are not very optimistic for the weeks to come. Cold-blooded buyers will definitely take the chance and bottom fish in the top quality hide market section and we think this is the right time to do it. For the rest, one can only remain pessimistic and concerned.
| 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 | € 1,30 | Weakish |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1,20 | Weakish | |
|
Dairy
cows |
15/24,5
kg |
22,5/23,5
kg |
13/22
kg |
20/21
kg |
€ ??? |
no market |
|
25/29,5
kg |
27,5/28,5
kg |
22/27
kg |
25/26
kg |
€ ??? |
no market |
|
|
30/+
kg |
33,5/35,5
kg |
27/+
kg |
29/31
kg |
€ ??? |
Weak |
|
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,35 | Weakish |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1,15 | Weakish | |
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 0,90 | Weakish | |
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 0,80 | Weaker |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 0,85 | Weaker |
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