German Perspective - 22.07.14
22/07/2014
For the hide market it has had very little impact and only the skin business continues to be harmed, because the business with the Ukraine and Russia next winter is not expected to be any better. The hide business in in the classic summer condition. Low kills, absence of European buyers due to the holidays and picking at the edges of the Asian market is the weekly situation.
We cannot confirm the positive reports of many as far as sales and interest from Asia are concerned. Interest this week was pretty quiet and apart from some vague enquiries there was no serious interest in material. The reason for this might be found in the fact that the interest for weeks is only in dairy cows and low grades while there has been hardly any interest in the more expensive heifers and bulls for some time already. Apart from the reduced interest, we find it tough to fight for timely openings of letters of credit. It seems not so much that clients don’t want the hides, but that reduced credit lines and of course the tanning capacity (if we talk about the north of China) are holding business back.
However, also in the south not everything is perfect; even there several tanners are struggling to keep business going. A lack of clarity about the leather business and prices in the coming season, as well as cash-flow issues and the summer temperatures, are forcing tanners into a phase of holding minimum inventory until they have a better picture. All this applies of course to small and medium tanners while the big players have to keep their places running.
Even with the negative impact of the political side and the negative trend for business and consumption in Russia and the Ukraine, automotive brands in Germany all still very busy and have announced extra shifts. Not that all these cars are equipped with leather, but leather has its share. Most of the big players in the industry continue to expand capacity and so do the component suppliers. However, price matters and one can clearly see that more and more economical options are in use in the leather supply, which allows tanners to fish around for raw material resources that they would never have considered before.
Other big tanners producing for shoes and upholstery have limitations in their raw material sourcing, which is holding the price of a number of standard articles pretty high and allowing suppliers to show little flexibility on pricing so far. So we move on from week to week and very little changes, because most players are treading water rather than being in a position to take any fundamental decisions.
The US dollar rose during the week and gained about one cent versus the euro, which is helping a bit in the calculations for export sales, which have been so difficult for some time now. However, to benefit from it would require more interest and sales. Not so much for cows, which have been moving quite regularly since the sharp drop, but more for the salted males that are not finding enough interest in Europe and need more marketing in Asia.
Sales this week have been far from impressive. There is always something, but what the clients want you don’t have and what you have the clients don’t want. Interest was mostly for cows and low grades with just a few requests for some small niche items. For the rest it was very quiet this week and far less active than in the weeks before. Whatever was done was on steady levels and the extremely narrow price range seen for a long time now remains intact. This might actually be good news.
The kill: Temperatures are on the rise and more people are travelling to their holiday destinations. This is never good news for slaughter and so we continue to stroll along with limited numbers and low weights. Any major change would be a surprise before mid-August.
What we expect: Well, Europe will be a non-factor for some weeks. All will depend on what the Asian buyers do in the next weeks. Cash-flow is a problem; the sentiment is that no one is in serious need of large amounts of raw material and we do not expect speculative purchases either. We fail to trace any real trigger for this market to move in the short term. It might be boring, but we believe that we will end the next weeks pretty close to where we are today.
| 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 | € 2,45 |
Pressure |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 2,05 |
Pressure |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 2,20 |
Pressure |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,80 |
Steady |
|
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,70 |
Steady | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 2,20 |
Weak |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 2,30 |
Pressure |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 2,15 |
Steady |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1,75 |
Steady |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1,70 |
Steady |
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