German Perspective - 22.3.16
22/03/2016
European hides sellers who need to export are finding conditions increasingly difficult.
High quality and heavy male material is moving well, supply and demand are well balanced and very few of the male hides exceeding the 40kg level remain unsold.
After the bonanza in the cowhide market that we saw from November to January, we are now experiencing the opposite and bids are down about $6 to $10 from the peaks seen in January. If we consider that the US dollar has lost around 5% to 7%, the drop in revenues is significant.
The biggest problem is that there's not much business around it so it's dangerous to call these levels the market. Although US dollar prices are making some progress, the American hides are far more competitive than the European ones.
A number of suppliers continue to be blinded by the stability of automotive hides, which many consider to be the benchmark for the market. It is obvious that Asian tanners are not desperate for raw material and even if they were, European hides would not be the first option. The abattoir prices have failed to adjust, which makes the problem even bigger. Now everyone has postponed their decisions until after the Hong Kong fair. This means we are not heading for a moderate and controlled adjustment, but for a big move, which barely anyone likes.
Sales this week were once again limited to the regular programmes with the European customers. The bids that came from Asia were far too low to accept, and not a single bid was improved in response to a counter or the attempt for discussion.
Many customers that have shipping containers are asking for extended time, which does not indicate any desperate need for raw material.
The kill: The beef business is pretty bad and beef sales, whether export or domestic, remain reasonably poor.
What we expect: The next week will be quiet and there is no indication that tanners will purchase material before the big get-together in Hong Kong. Price lists might not change much, but we do not consider them indicative of the market at this time.
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