German Perspective - 03.10.17
03/10/2017
From our perspective it is pretty unlikely that these three days will suddenly be the turning point of the market, because the problems of the raw material scene look much more structural than just one of the typical cycles of ups and downs. Raw material producers, represented by the beef industry and traders, are trying everything to stem the decline, but in many origins and for a number of hide types it has proved to be a mistake to ignore the writing on the wall, as we already saw in spring. The majority of European suppliers cannot even complain, because many hide categories have not been hit yet or have had enough time to prepare. However, as usual it seems that a good number of people took no notice in this part of the world. EU markets are now in the process of attempting to find the right levels for the various hide categories.
There is no doubt that hide prices for the standard items have to find competitive price levels to regain market share and enough outlet to move production. Isolated niches will not be enough to support the entire production of hides in the region. The biggest problem is actually to find the right levels in the pricing systems, in particular for prices at the abattoir door. The spread of prices for different hide grades from the same region is wide and getting wider if one compares them with similar raw material alternatives from international sources. Some European hide types may look cheap in price for many in a historical context or in relation to recent history, but in a market which is generally oversupplied and with alternatives gaining market share, nothing is cheap.
So, we are presently not really in a weak market in Europe, we are just in an adjustment phase to bring the average valuation of hides back into line with global prices. As a next step, the coming weeks will tell us how much fashion demand there is to support raw material demand for the winter half of the year.
Trade and sales this week were once again pretty quiet. Not really a surprise, because everyone is waiting now for the fair in Milan. China and Asia in general are not a factor at the moment, despite the positive sales reports from the US. The US dollar was a bit stronger for most of the week, but it did not convert into anything sustained so far. Sales - in numbers and in prices - have been worth mentioning and, after various conversations with colleagues, it seems this can be considered to be a general statement before the week in Italy.
The kill: Temperatures are still pretty comfortable for the end of September and the grass still grows well. The kill is just about adequate for the conditions and time of the year. In the coming week we will have a sharp drop before numbers return to their normal seasonal pattern.
What do we expect: There is nothing really clear to read in the crystal ball and so one has to wait for the impressions from the fair in Milan for further judgements. However, price adjustments at the abattoirs are a must to get the EU market back back to a workable level, no matter what happens next.
| 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 | € 2,20 |
Weakish |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1.45 |
Weak |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 1.60 |
Weak |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,35 |
Steady | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,30 |
Steady | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,80 |
Weak |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.80 |
Steady |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.75 |
Weakish |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1,10 |
Weakish |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.25 |
Steady |
Share this story:
