German Perspective - 16.2.16
16/02/2016
This might not only be related to the holiday but also a result of the general markets. Stock markets are falling, currencies have become vulnerable and the national banks continue to drive interest rates into negative territory to make people spend, but for the moment this is achieving the opposite.
It is a time of great uncertainty and governments are undermining the confidence of companies and consumers, so everyone is holding back. The Chinese stock market was closed over the holiday period and many markets had lost quite a bit of their index value.
Generally, we should see a week of 'sniffing around'. This might not offer much entertainment, because sellers will not change from the ideas they had 10 days ago and so it is likely that the stalemate will continue.
The leather business is divided into two segments. A smaller one where people are complaining about everything but one which is working regularly, and another where things are far less exciting and order books are empty, the outlook is uncertain and tanneries are working hand to mouth at best.
The latter ones are desperately waiting for secure orders to enable them to make their plans for the months to come. Unless the Asians come back from their holidays with renewed optimism it seems most have postponed their decisions until the Lineapelle fair in Milan (February 23 to 25). From the number of emails and inquiries, it seems the visitor numbers will be excellent. The worry is that most of the ones announcing their presence are hides suppliers, which normally means they don’t feel comfortable with the information they have on the market.
As far as prices and trading activity is concerned, 'zero' describes it pretty well. Business from Asia was non-existent and nobody was in need of hides in Europe, apart from the regular programmes. Consequently it makes no sense to discuss prices. No market, no sale, no price.
The kill: No change as far as the kill is concerned. Numbers are down, with the carnival dominating large parts of the country. The proportion of females is still dominant and the low milk prices might command the available cattle for slaughter for a while. The cattle count would speak for a decent number of bulls now waiting for slaughter, but they are not reaching the abattoirs. Weights are reaching the seasonal highs with the exception of dairy cows, where the elder ones are killed, reducing the average weights.
What we expect: It is uncertain when the Chinese will return. Many tanners will start making tentative enquiries, and when this results in sales we will know that they need to purchase and this should lift some pressure. The exchange rate is 3%-4 % down since the holidays. Generally however, not much will happen until the Lineapelle fair in Milan.
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