Market Report 11.08.2023

What happened this week

Actually, you can rather forget about market reports at the moment. In Europe, the tanners are either still on holiday or they have already completed their planning and purchases into September. In Europe, the discussion is anyway much more about other issues at the moment, such as labour shortages, energy costs, new bureaucratic requirements, environmental issues, etc., which will probably influence the production of leather more in the near future than the question of rawhide prices. One also gets the impression that the leather industry is increasingly concerned with the question of location. Depending on the articles and the customer structure, more and more leather producers have to ask themselves how they want to react to these changes. Many leather factories still have a number of successful articles, but often their production just does not cover the volume and total revenue requirements needed to successfully continue production. For some, this is seen as a temporary phenomenon, as it has been many times in history, while for others, serious thought is being given to how to deal with this problem. In the short term, however, hardly anyone believes that this basic problem will change in the next few months and thus the time factor for decisions and their implementation plays an increasingly important role. While these are the problems of the leather industry, the meat industry is also struggling with similar difficulties. Here, too, costs, the appropriate marketing of all cuts and parts and, of course, the problem of labour recruitment play a weighty role. It is highly likely that structures in this sector will also have to change in the next few years. In terms of sales, last week was not much different from the previous ones. In Europe there are hardly any accessible customers and in Asia the business is almost completely limited to China. There is interest and the opportunity to sell cowhides every week and they have now settled on a weekly recurring scenario. At the beginning of the week, the market is tested with bids that are usually $2-3 below the previous week’s sales and $4-5 below the offers that one would like to have as a seller. The discussion then ping-pongs along for a few days and you usually end up back at the same prices you had before on the Thursday or Friday. Nobody is particularly excited, nowhere is there any great hurry and in the end you always have the feeling that nobody is really happy, but also not completely unhappy with the deals. However, it remains completely unclear to us whether these purchases are actually led by an existing or expected demand for leather, or whether they are simply to supply production from September onwards for the time being. With prices for cows in the 20s, it is also clear to customers in China that a lot of money would not be saved by waiting and so they check what and where can still be saved with sporting efforts and otherwise come to terms with the current level. However, sporting efforts for higher prices have not been successful either.

The kill

In the middle of the holiday season, there is no news about slaughtering and meat consumption. This will certainly remain the case for the next two to three weeks. After that, the school holidays will end week by week and at the beginning of September we will see how beef consumption will continue. At the moment, retail prices are still quite high and consumers are holding back. The main demand at the moment comes from the restaurants, of course also more from the holiday resorts.

What do we expect

We don’t see any changes in the coming weeks. It gives the impression that prices have now settled for the time being and neither buyers nor sellers have any reason to make any decisive corrections to their ideas, so business is just plodding along at the current level. However, it has to be said that this is exclusively about business with Asia and therefore only about the articles that are sold there. The price discussions in Europe and the directional decisions for the heavy and male goods will probably not be made until September. New price pressure for these items might not really surprise anyone then.