German Perspective—10.03.09
10/03/2009
GERMAN PERSPECTIVE—10.03.09
What happened this week: We cannot see that the situation is getting much clearer. There remains a large discrepancy between prices in the various markets and, depending on the main operational market focus, the opinions are different. Those who are still concentrating on the European customer base find things much more complicated than those operating on a wider perspective, reaching more international markets. Outside central Europe there are still many more niches and sales opportunities to be found. However, nothing is for free and the other markets require more commercial skills and carry more risk potentials.
More important factors are cash needs, storage restrictions or limited capacity to salt material. Whoever needs to move fresh cowhides needs to take what the few available buyers are willing to pay. This is creating a price level for cowhides in Italy which is unworkable and we wonder how people are managing to survive with the selling prices comparing them with the levels still needed to be paid at the abattoirs. Under these circumstances it is also strange to see how people are acting today at the abattoir door. The cheapest sellers are the highest buyers.
The general economic situation is still offering little support to the leather business. From the automotive sector there is constant bad news and the monthly sales figures are really frightening. What is even worse is the fact that there is no real light at the end of the tunnel yet. Models containing a higher percentage of leather are not selling well in the markets these days and the smaller and cheaper cars are still not offered with much leather interior.
In the furniture segment we have still to hear of any improvement—at least in Europe. Shoes and accessories are still the best performers, but with large differences between brands and markets. A lot depends these days on if your customer base belongs still to the strong performers or not. It is not the a for picking and choosing the best deals or clients because one can only take what one can actually get.
Although the kill is way down in many origins and better quality hides are today in an improved balance between supply and demand, there is still a decent surplus of hides overhanging the market. Those who believe they can push prices higher will probably need more patience before their hopes will be fulfilled. There are still too many alternatives for buyers to be forced to pay more money.
Sales this week were reasonable at the beginning of the week almost completely to overseas destinations. Towards the end of the week activity slowed remarkably and the firmer US dollar was not able to stimulate demand anymore.
The APLF leather fair in Hong Kong is starting to cast it shadow and Asian buyers are waiting for their international suppliers to arrive to see what kind of deals they have to offer. Prices were more or less steady again without any variation worth mentioning, but there was certainly no upward movement; any variations were on the downside.
The kill: The kill remains low. Like in many other countries beef consumption is low and the cattle offer insufficient.
What we expect: Although some were thinking already of a turn for the better, we remain cautious. Even with the lower kill and better shipments in February it will not need much to get this market back into trouble. We would only be convinced by seeing more and sustained demand until the end of April to absorb more of the inventory of salted hides still sitting around in warehouses in many parts of Europe before we enter the summer period.
| 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 | Struggling |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1,20 | Struggling | |
|
Dairy
cows |
15/24,5
kg |
22,5/23,5
kg |
13/22
kg |
20/21
kg |
€ 0,80 |
Struggling |
|
25/29,5
kg |
27,5/28,5
kg |
22/27
kg |
25/26
kg |
€ 0,70 |
Struggling |
|
|
30/+
kg |
33,5/35,5
kg |
27/+
kg |
29/31
kg |
€ 0,60 |
Struggling |
|
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,05 | Struggling |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 0,90 | Struggling | |
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 0,70 | Struggling | |
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 0,50 | Struggling |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 0,50 | Struggling |
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