German Perspective - 17.07.18
17/07/2018
The usual maintenance and installation of new machines is going to take place and everybody is going to catch a few weeks’ rest. This means an almost dormant situation for sales. Some people are discussing contracts for after the holidays but it generally means just to cover the first days or weeks and not to commit for too much longer. The usual specialists, who have to take care that they get exactly the product they need, are the exception to this. Special selections and special articles are still in pretty good demand and the supply side hasn’t changed at all. This means as a tanner that you have to be far more focused to secure raw material than in the mainstream markets, in which, for every single hide type there is abundant supply to choose from and suppliers are ready to discuss business and sales.
With the European tanning business now disappearing for the summer break, the focus is back on the potential customers in Asia. Once again business is never zero, but you have to work hard and you have to pay very close attention to where any loopholes could be.
Selling is a tough job these days, but administration is even worse. Payment is always at the very last moment, which makes the planning for shipments a big challenge; sometimes the trucks with the containers are already in the yard when you are still waiting for the SWIFT message to confirm promises will be kept regarding payments. This is not easy because the flexibility of shipping lines is not what it used to be.
Most of the focus in Europe continues to be on the future of automotive production. For the first half of 2018 almost all of the large European automotive groups reported record numbers for production, sales and profits. So far so good, but at least for the German industry it seems that the outlook for the second half of the year is far less impressive. The rumours of some weeks ago are beginning to become reality for the time after the summer holidays. There is information that several brands are slowing production down. The excuse is still the diesel scandal and, in part, the UK’s departure from the European Union. From our perspective, it is much more than that and automotive demand and sales seem to be beyond the peak.
Certainly this does not yet apply to the luxury and premium end, where export sales are still very good, but much more for the bread-and-butter cars that make up most of the volumes. This could become an issue for hides because it would mean that sliding demand would meet higher hide production in the last four month of the year.
Sales this week were once again pretty much a reflection of the previous weeks. Specialty articles are still selling very well; one cannot feel any decline in demand or negative expectations. Heavy and high-quality hides can still be placed with regular customers. The biggest challenge is with cow hides and low grades. Bids are low and so it’s just picking up a few strategic sales that need to be made even if this means losing money. The European abattoir prices are still not taking into consideration that for female and low-grade selections not all the hides can be cleared.
The kill: Holiday time. Low kill, low weights and no change in sight. In particular the slaughter of heavy bulls is suffering.
What we expect: There is no reason why the situation should change, but it also seems that nobody has any great expectations any more. We will have to wait for new inspirations and that could take a while. This means the pressure will continue for some time.
| 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 | € 2,10 |
Stable |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1,10 | Weak |
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Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ n.a |
Weak |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 0,85 |
Weak | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 0,80 |
Weak | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,60 |
Weak |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.65 |
Stable |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.55 |
Stable |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € n.a. |
Weak |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 0,85 |
Steady |
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