German Perspective - 30.01.18
30/01/2018
Everything today is garnished with discussion about climate change, sustainability and social justice to help the feel-good factor. Most of this is, however, empty words because the desire for a common global strategy is fading quickly with rising nationalism and big egos among political leaders taking its place these days.
The massive slide of the US dollar versus most other currencies was the story of the week and this applies to the hide market as well. A lot of calculations in exporting countries had to be rewritten. In addition to the already existing demand problems, the currency factor has become another negative short-term parameter. This would not really be worth a mention if prices in local currencies could be adjusted as quickly as the currencies are. This is unfortunately not the case.
Considering existing problems in being able to process hides profitably and successfully, the currency factor has come at the wrong time. As for demand for leather and hides, we continue to fail to see or feel any difference. Demand for this time of the year remains under par. Asia continues to under-perform; tanners there don’t need more raw material and continue to cherry-pick. Every week one receives some enquiries, but it is more than questionable if there will be enough sales to clear the surplus of hides in the medium and low-end sections. It seems that good suppliers can still choose from bids and can decide how many hides thy move while the low performer are pushed aside.
However, the currency situation has once again changed the balance. Our hides have become 4% more expensive since end of December while US hides have become 4% cheaper. That tanners are recognising this can be seen by the rising number of sales of US hides into Europe. The price gap is so wide that more and more tanners will test this and restructure their raw material supply to remain competitive.
Selling was once again focused on the regular buyers. Programmes are renewed where they have expired and others continue to buy hand-to-mouth and pick selectively the material they need; last week it was mainly heavy bulls and the odd load of cows and heifers.
Prices are on a weak-to-steady note in Europe and every sale now has to be rewarded by shaving the price of something down by a bit. This has in the meantime even reached the premium heavies. It may not be much yet, but the direction is set and margins continue to shrink. Premium tanners may, even at today’s prices, still be operating profitably, but everyone is aware that are becoming more and more particular and the level of risk is building up on selections and articles that are not quick to turn around.
The kill: The kill is steady and at the levels one can expect for this time of the year. For the weeks to come we would be more than surprised to see any change.
What we expect: The market is in a stalemate and needs a push to new levels. The main target is once again to adjust abattoir prices to enable us to compete internationally again. The currency market could remain tricky and some precaution should be taken. Questions remain about how the rest of the players value the situation and if they share the same concerns. For the moment we don’t see any upsides, just moderate downside potential.
| 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 |
Stable |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1.30 |
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 |
€ 1,20 |
Weakish | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,15 |
Stable | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,75 |
Weak |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.75 |
Weakish |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.70 |
Weakish |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1,00 |
Stable |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.10 |
Steady |
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