German Perspective - 21.11.17
21/11/2017
Core business is quite stable; the hides needed for current levels of leather production are being produced and delivered. There is an ongoing fight over prices, but in the end the hides needed for the current orders have to be delivered and put into tanning drums. However, for all hides outside this, either in quantity or in quality, the situation is totally different and the present market demand is simply not good enough to absorb the total number of hides being produced in abattoirs. This means that the price levels for the hides going into regular programmes and the ones for which we are having to look for alternative homes is getting wider and wider by the week. Price is not really stimulating demand and this is creating fierce competition between the various origins of raw material.
Last week the better tone of the US steer market was quoted a number of times and the optimists are hoping that this could finally be a tuning point. Well, those who deal with facts and numbers are generally coming to a different conclusion. The uneven spread of leather demand and leather production shows that the general global surplus continues. Beef industry forecasts foresee no major decline; most forecasters even see beef production rising. This could be a consequence of heavier beasts, but generally we have to assume that the number of hides being produced is not going to decline. At the same time there is no indication that the shoe business in particular is about to increase its use of leather and it seems that excess production is likely to continue, although there can always be short-term rebounds in regional prices without really breaking the general market trend.
We are now already reaching the end of November and, at least in Europe, the majority of tanners have already reached agreement with their suppliers over raw material procurement until the first weeks of January. This means that additional raw material demand cannot now be expected from Europe until 2018. Extra demand will, once again, have to come from Asia.
Business this week was once again determined by patchy interest from Asia at low prices and, in some cases, it took until Friday to reach agreement. Prices from Asia remain low and the weaker US dollar has wiped away any benefit. The retreat of abattoir prices continues to be too slow and too little. Males in particular look far too expensive in relation to other comparable origins. However, there are still players who, despite of all problems, are avoiding any adjustment in prices.
The kill: The kill seems to be at its seasonal high. Numbers are quite good and weights continue to rise as well. The supermarkets are planning for Christmas and we expect the kill to remain at present levels.
What we expect: The pressure on prices persists, but it seems that for 2017 no big changes can be expected any more. For various reasons hardly anyone wants big movements. However, the fundamentals have to be taken into consideration and only a surprising change will move prices either way.
| 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 |
€ 1.50 |
Weak |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,30 |
Weakish | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,25 |
Weakish | |
| 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 | € 1.75 |
Steady |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.70 |
Steady. |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1,00 |
Weakish |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.20 |
Steady |
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