German Perspective - 12.11.19
12/11/2019
It is, however, clear proof that for the majority of the hides produced in western Europe the market has reached a fair balance. Except for the stock that is still sitting around in various warehouses, the current production leaving slaughterhouses is finding almost exactly its market in terms of the requirement of the tanneries. Smaller surplus or shortage situations can be handled and do not create any major disturbances.
Buyers are also becoming increasingly picky in terms of specifications and quality; another clear sign that they do not see any risk on the supply side. It seems that both parties are presently playing the low-risk card and not really trying to risk what has been achieved in terms of stability. The seasonal rise in leather production is fortunately also compensating quite well for the rise in the kill.
We expect the kill to rise even further in the coming weeks and that means we will have to see how the market digests the extra quantities towards the end of the year. For the time being, everything points in the direction of several suppliers having already taken a moderate forward position to make sure that their production moves smoothly. If this is true, we would have to assume that the risk of larger changes in the price structure are also limited until the end of the year.
We think that most people tend to agree that we haven’t seen many periods in history when price variations have been so small as they have been for quite some time now. We have to admit that we appreciate such periods, while traders and speculators may disagree. Considering all the uncertainties in the global economy and the particular problems leather as a material is facing in consumer products these days, it might be the best option at the moment. It is also true that the longer such a situation continues, the greater the number of people who may be willing to take a risk on something new. For our part of the world we might still have a few months to wait, because rising supply and the active season in winter should shelter us from any big variation.
Trading this week was a bit of a mixed bag. There was interest for items that were selling comfortably, but with anything we were still trying to sell, clients were not too particularly interested. Standard programmes in Europe have been renewed in most cases until the end of the year already. Overseas sales were very select because we were really just picking around the edges and checking shipping times as well. Prices were entirely steady and variations were the result of currency fluctuation.
The kill: There’s not much new about the kill. The numbers are rising and so are the weights, exactly as one would expect at this time of the year. If there’s anything worth mentioning it is the shift from lighter-weight bulls to heifers in the slaughter mix.
What we expect: We cannot trace any reason why we should expect any major changes in the weeks to come; definitely not from the buyer’s side. It’s possible, although not too likely, that a seller somewhere will be willing to play with fire and try to create a new trend. There is a fair chance we will see prices stay where they are today for a while yet.
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