Osterhorn,
Friday, 11.01.2018
Market Report

The US $ in EURO
1,1480


What happened this week?: The second full week of the year ended and slowly business returns to normal. European tanners return to normal mode and the Chinese tanners continue to fish for bargains and are quite surprised that for the female section the trade believes the market has grounded and there is very little interest to discount prices any further. The Chinese clients find this very difficult to understand since it had become common practice until the end of last year that the next deal was a cheaper deal and obviously were the chinese buzers convinced that this would continue also in the New Year and may be as long until hide values reach yero levels. Well, at the end it is not really a change in the general market, but a simple economical logic. For the average quality leather market not just looking for the cheapest price and full correction the EU cow is presently the most attractive option to produce an acceptable medium quality leather. Most reliable suppliers had been able to sell sufficient volume in particular in the heavier weight ranges and with the declining kill positions are in balance with a few exceptions of light weights and "odd lots" with questionable origin and quality. It seems that we found the fair average value prices now and that are the good news as long as we dont face new competition from other origins. To speculate on a rebound is definetely premature, because on the leather markets nothing has changed and we should not fall into the trap that the Chinese activity prior to their holiday break is an indication for a fundamental change in the market yet. Soon we will enter the holiday break in China, after that we are going to wait for Hongkong and this is generally followed by the end of the high season of upholstery leather production from May onwards. So, lets enjoy that we traced the right value for these hide types and this is what we are still missing for the male section. Generally the hide market has been once again a solid indicator. Hide prices tumbled alreadz when the big industry was still telling us about good business and great prospects. Any doubts and questioning was considered to be negative and not appropriate. Well, with managements have secured their 2018 bonusses the real news are arriving in accelerating speed combined with the excuses. All correct with the only footnote that most of the facts had already been known several months ago. Anyway, the hide market is still immune to such kind of fake-news, but remains sensible to the games played within its own community and the ignorance of facts. For some time we will have to deal now with a slow down in global vehicle production. Forget about the statements of several CEOs of the industry. Car sales are cyclical and in addition to the general cycles we have several other negatives. Since the industry was not willing to adjust production in anticipation (bonusses in danger?) to meet the annual targets and celebrate record numbers we are now facing a decent congestion along the supply chain. This sets the overvalued males under serious pressure and nobody knows when and where the correction is going to come to a hold. Trading this week was once again related to the willingness to accept aggressive bids or not. There was certainly an increased number of bids and interest, but the prices were not really inviting and until this evening a number of counters were still left open. The majority of the interest was once again for higher quality and heavier cows and heifers which are simply more attractive than males. If all negotiations will end with a sale it would have been a good week and if not a bad one. Most of the interest came from Asia this week while Europe was not seen much..   The Kill: The kill this week was back to seasonal levels. \less then in the high season week in the last quarter, but for a January simply normal. There is less life cattle in the market and the calculation of butchers is not easy for the time being. Weights are actually still lower than expected for females and regular for bulls.. What do we expect: We expect the coming week with far more excitement now. One side we like to see what happens to all the pending orders and also what the EU tanners are going to do now. Various regular programs need to be renewed in the coming two weeks and tanners attitudes will also tell us a bit more about the leather demand and position. Most tanners report still about a massive aggression on prices from their leather buyers and will certainly expect further reductions. Lets see.


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 € 1,60
Stable
  25/29,5 kg 27,5/28,5 kg 22/27 kg 25/26 kg € 0,90 Stable

Dairy cows

15/24,5 kg

22,5/23,5 kg

13/22 kg

20/21 kg

€ 0,70

Stabilized
 

25/29,5 kg

27,5/28,5 kg

22/27 kg

25/26 kg

€ 0,58

Stabilized

30/+      kg

33,5/35,5 kg

27/+   kg

29/31 kg

€ 0,53

Stabilized
Bulls 25/29,5 kg 27,5/28,5 kg 22/ 27 kg 25/26 kg € 1,50
Weak
  30/39,5 kg 36,0/37,0 kg 24/34 kg 31/33 kg € 1.50
Weak
  40/+     kg 45,0/48,0 kg 34/+   kg 38/40 kg € 1.35
Weak
Thirds 15/+      kg 25,0/27,5 kg 13/+   kg 24/26 kg € 0,35
Weak
Thirds bulls 30/+      kg 38,0/40,0 kg 24/+   kg 33/36 kg € 0,75
Weakish





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