What happened this week: The show goes on and, as with the financial crisis, we are waiting week-by-week for the end. But there is no end. There are too many sellers still wanting or needing to sell hides and there is still a shortage of buyers to take them all. As we mentioned last week, if European tanners do decide to buy, they are cherry picking from the top-quality end and are laying most other options aside. This is understandable considering today’s price spreads.

There are some Asian buyers fishing around at the bottom and there was certainly more activity and interest around than in previous weeks. However, nothing is really helping the market at present. There is still an abundant supply in most other places, and whenever a reasonable sale countered the pessimism a bit another origin came round the corner dumping more hides at lower prices.

In the end, no one really knew anything more and the biggest problem in the market was the rumours and gossip. Everyone had a story about cheap prices from somewhere and the price ration between the various grades and origins just doesn’t fit anymore. It has now become a race to be the cheapest in order to avoid someone else getting a sale and moving some hides.

Sellers have lost all control and no one can blame even the toughest and most experienced buyers for getting completely confused. Sellers should understand that they are losing much more by striving to be the cheapest than they are actually gaining. The constant drop in prices is not stimulating any demand; quite the reverse, it is destroying it. In view of the Christmas break and the Chinese New Year, everyone believes there will be no market for the next eight weeks and that what doesn’t get done today will never be done again.

The consequences are all well known: claims made mainly for market reasons; contracts that are not honoured; letters of credit that are not opened; and prices that have to be renegotiated. These are all logical reasons and weigh heavily on the mood and temper of hide sellers worldwide.

One thing is certainly true: problems we are experiencing in the hide trade are also affecting many other raw materials markets, and some say it is even worse in other fields. We did not even have a bad sales week despite all the negative news. Under normal conditions we would even be quite satisfied, but today nobody really knows if the sales mean anything when the buyer finds new offers about an hour later that are significantly cheaper.

There is never a good feeling about sales made on either side of the table. Prices had to be dropped again for most grades and cows are suffering the most. However, without any fair valuation between the grades, nothing can really be said about prices and their feasibility. So, even with a reasonable number of sales, nothing has really improved.

The kill: The kill remains on very high levels. Maybe butchers know what will happen to their by-product prices soon and are trying to grab as much as they can before prices at the abattoir door take a hard beating next month. Some imagine that prices could reach single-digit figures.

What we expect: Thinking about it, the best thing to do is copy this from last week. We said last week that we wonder what can stop the chaos. We are not very optimistic for the weeks to come. Cold-blooded buyers will definitely take chances and fish for bottom prices in the top-quality hide market section and we think this is the right time to do it. Apart from this we can only remain pessimistic and concerned until the holidays are over. 

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