German Perspective - 02.02.16
02/02/2016
The options are to believe the market is really that bad or to think that tanners had basically closed their purchasing departments already for the holidays and were now just sending test bids out that would not bring any risk even if accepted. The most difficult question is if anyone accepted any of the lower prices. Buyers and agents obviously claimed that there were sales done, while most sellers denied even considering any of the low bids and said they would prefer to wait until the return of the Chinese buyers towards the end of February.
We have an odd feeling that some business has been booked at well below the last levels. Whatever the reason, we will see by the indications and reactions this coming week how much truth there was in those stories. Everybody knows that none of the sales done in Hebei province remain a secret and any deal influences all the others immediately in their ‘me too’ mentality. In a rising market you get plenty of bids at the same levels in the hope they don’t miss anything and in a falling market the others are either just walking away or will try to beat their colleagues by offering an even lower price.
From the demand side we would be surprised to see more interest for upholstery hides out of China until the return from the Chinese New Year holiday. They bought well at the start of the year and, with the hides shipped in January and those still going onto ships in February, tanners should be well covered for a while. We have been missing business with shoe tanners from Asia for some time now and this might be explained by poor leather business, but could also mean that they might be ready and willing for a bit of replenishment before their holidays. This is more a hope than anything else.
There is no indication yet that leather demand has picked up enough to entice tanners into any purchases right now. Everybody tries to talk prices and trends today, but from our perspective it would much more interesting to discuss where more leather demand could come from in the coming months. Is everybody just waiting to place orders due to the volatile economy and stock markets or can we just write the season off?
We have still a lot of exhibitions ahead of us and maybe one of them will offer us more information about the real situation in terms of leather consumption and requirement. For the moment at least it is hard to find any tanner who is more concerned about raw material supply than leather sales, not to mention leather prices.
Sales this week were again well under par. Fresh males to the EU industry are still moving regularly, but any surplus in salted hides and those below 40 kilos in weight are bringing no interest at the moment. Heifers have lost their shine in Asia, low grades are also out of fashion and dairy cows have faced low bids if any, so we would be surprised if anyone closed the books for last week without disappointment.
The kill: The kill is also nothing special and the number of males in the mix remains pretty low. Cows are dominating and we are heading towards Lent, which will not support the kill either. Weights for males are heavy while they are below seasonal average for dairy cows.
What we expect: This week will be the last week of operation in China and the week after it will be only half a week in the Catholic parts of Europe too. The shows in Pakistan and India will not make much difference, but might tell us a bit about the shoe business and if Chinese productions are relocating. Everything points towards some more weeks with pretty slow trading activity, which cannot be good for the price trend into the month of February.
| 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 | € 2,30 |
Weak |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1.90 |
Weak |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 1.90 |
Soft |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,65 |
Soft | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,60 |
Soft | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,95 |
Weak |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.95 |
Soft |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.85 |
Soft |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1,35 |
Soft |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.35 |
Soft |
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