German Perspective - 27.01.15
27/01/2015
The market situation remain from our perspective totally unclear. One hears all kinds of stories from everywhere and the prices talked about are wider apart than ever before. Consequently it is very difficult to nail the average market level.
For us the overseas activity was neither here nor there. Our regular clients follow us and with the tailwind of the US dollar one could book what needed to be booked. However, this was nothing special in terms of interest and quantity. Europe was pretty quiet. Most are of the opinion that one should not worry and tanners are covered until the end of the month only. They will come back and sales will be okay. However, we are not 100 % sure about this. Certainly tanners have to replenish and they will also continue to buy and take fresh hides for February, but a time of full confidence is different.
No matter what the US dollar does, no matter what the overseas markets are reporting, nobody is rushing for offers; if they were it would be a sign they were scared currency variations were about to lead to higher prices. There is no sign of any desperate need to buy and due to the very heavy kill seen since November we also believe that there is still a pretty decent backlog of salted hides around, in particular when we talk about the ‘prestigious’ heavy bulls for the automotive industry.
The situation in China could also become an indicator. If it is true that some European suppliers were asked to renegotiate contracts, or that sales have even be cancelled, one has to wonder what should happen to some other origins where contracted sales from December look far more expensive today.
Whatsoever, customers daring to do this must have a serious problem as they know the stigma it leaves for the future. Regarding sales activity, we were told that some of our European colleagues were trying to sell quantities at discounted prices. If they were selling stocks in combination with the higher US dollar we would not be too surprised and the damage would be limited.
We found business quiet, but regular enough to move what we wanted and discounts have been limited. The developing interest for bullhides from China is interesting. Chinese tanners are always reluctant to substitute US steers with EU bulls, but the temptation must have been too strong. Sales in numbers were sufficient again to keep things moving in an orderly pattern.
The kill: Despite all the predictions of lower numbers, we are still impressed by the weekly production. It is 5%-10 % below peak levels, but for January this is still pretty high. Weights for males are still very heavy while cows are a bit disappointing. We are actually a bit unsure about the weeks to come.
What do we expect: Our confidence in the market remains limited and we are happy to have support from the currency market. However, this is only borrowed in the long run. Leather business is just not strong enough to expect any rebound. The market needs to find new correlations which are not so influenced by the currency markets. This may cause some hiccups, but the pressure persists.
| 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 | € 2,35 |
Steady |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 2,10 |
Steady |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 2,30 |
Steady |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1.95 |
Steady |
|
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,85 |
Steady | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 2,25 |
Steady |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 2,20 |
Steady |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 2,05 |
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 | € 1,75 |
Steady |
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