Christmas and the end of the year are fast approaching. In many countries (not in Germany anymore), football is currently dominating the daily routine, which makes planning even more difficult at this time of year and in some respects. However, in many factories, production is probably no longer large and significant until the end of the year, so coordination is a major problem. In Europe, the business and delivery planning for 2022 is largely completed and before the Christmas holidays, only the talks for January have to be held. In China, all eyes are now on the government’s pandemic policy. After the protests, there is hope that the government will allow some easing and that production can be better planned again. In any case, it was already noticeable this week that customers in China are again looking at European hides because – similar to Europe – they only see prospects in the production of leather with a higher added value. Those who immediately see potential for a stabilisation of prices for European hides should take a look at the foreign exchange market and the current demand for leather. The USD has lost almost 10% compared to the highs of a few weeks ago and leather demand does not yet provide any indications for an improvement. In any case, the competitiveness of European raw material is falling equally with every cent the USD

declines. Although conditions may be improving in China, many fear a wave of bankruptcies or a large number of closures of leather factories, shoe and furniture manufacturers. The losses in production, exports and local demand seem simply too great and the prospects for a sustainable recovery simply too small to keep all production alive. Sales reflected the above. In Europe, sales were very small. If one was prepared to bear the lower revenues due to the decline of the USD, trial orders for various cocktails of hide types were possible in Asia. Judging by the current purchase prices at the abattoirs, commercial nonsense, but who knows if it will not be a necessary investment for the next year. Interest was again concentrated on lighter hides and, on the other hand, heavier male types. For the standard items for furniture, cows, there was no real interest, which was not a big surprise due to the lockdown in Hebei.

The kill

The kill is fluctuating at a high level. This week they were again at very high numbers, but the forecasts for next week predict a decline again. The weather has adapted to the season and we expect the kill to be more or less stable until Christmas without expecting very big improvements in meat sales. The consumer behaviour for Christmas and New Year’s Eve remains exciting, as well as whether the course of fine cuts for the holidays will again increase significantly.

What do we expect

In the coming weeks, business in Asia will determine the market. This means above all which direction the currencies will take until the end of the year. At the moment, not much tailwind is to be expected and it is actually hard to imagine that we will see much activity in China before January. It is possible that they are waiting for further price reductions and buying opportunities when the Europeans go into the Christmas break. But it will hardly help prices.