Osterhorn,
Friday, 27.01.2012
Market Report

The US $ in EURO
1,3190


What happened this week: The slaughter industry has been pretty successful  to move the market higher now on the story of generally shrinking supply. In complete ignorance of the general conditions and the economical situation in the leather industry asking levels have been substantially increased at the abattoirs and obviously nobody is taking into account, that the situation for European hides is not anymore the same as it used to be some weeks ago. The impression, that the debt crisis in Europe might be easing have given the Euro a lot of tailwind and the currency has actually gained almost 5% in little more than a week. 5% means about $3-$4 per hide which the market at the moment is hardly willing to pay. Within Europe the situation is also not getting much better and with rising raw material prices we are slowly returning to the same problems we had been discussing and facing already a couple of months ago. The entire focus of the European slaughter industry remains on the few bright spots which are still the luxury accessories made from leather and the automotive industry still enjoying in the premium end a decent order book to be worked down. As much justification this might deliver for the premium raw material segments as little it is justifying higher prices for the bread-and-butter articles. The situation in the mainstream production hasn't been good and isn't much better today. Many people are pointing at the fact, that the hide market globally is trending firmer again, but that these people are obviously overlooking the currency effects. European hides had just become competitive again after the correction in November and December and is included as well the declining value of the Euro. The US market may have gained four or five dollars a piece over the past weeks, but if we consider the decline of the US dollar the Euro revenues haven't actually gone up for European suppliers. Connsequently there is very little justification for higher domestic prices. However, we have to deal with the fact, that supply control is making the pace at the moment. Reports from the beef industry about falling slaughter scares many tanners and they try to secure raw material atthe corrected levels. That's what they have done and that also why the demand and the sales have been pretty adequate on the corrected market levels we have seen since mid December. The key question is actually now if this is enough to push the market higher without causing too much economical damage. Pretty questionable and the interesting question now is if the serious extend of purchasing has put the tanning industry already in the position to refrain from accepting substantially higher asking levels. Another factor we have to consider is the fact, that many Asian buyers still favour to purchase into a rising market as they are afraid and refraining to buy as long as the market is falling. This is certainly adding

to the present trend, than the real need for more raw material. Anyway, fundamental market trends are hardly changing from the week to the next and so has also the present trend possibly still some time until it has run its course. Trading this week was pretty light. The European tanning industry and the suppliers are waiting for the outcome the next round of abattoir purchasing and the Asian customers were pretty quiet during their holidays. They were willing to buy at the price levels we had been at two weeks ago and asking just the 4-5 % increase for the currency they returned quickly to their families and continued to enjoy their vacation. Apart from some patchy sales there was actually nothing going on this week.  The Kill: The beef business is still pretty poor. the slaughter numbers remain on very low levels and with the carnival season ahead of us we don't expect any major rise in the numbers. The only positive thing we can find  are rising hide weights which are helping calculations a little. What do we expect: Despite all the strong trend we are still not totally convinced, that this has such a solid base to drive prices significantly higher. the slaughter industry will have no mercy and will push as long and as hard as they can. This might, with the help of the low kill, still dominate the market for a while, but economical fundamentals should take over  again eventually. For the coming week higher asking prices and little business should still be expected.



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 € 1,90
Steady
  25/29,5 kg 27,5/28,5 kg 22/27 kg 25/26 kg € 1.70
Steady

Dairy cows

15/24,5 kg

22,5/23,5 kg

13/22 kg

20/21 kg

€ 1.70

Steady
 

25/29,5 kg

27,5/28,5 kg

22/27 kg

25/26 kg

€ 1.55

Steady
 

30/+      kg

33,5/35,5 kg

27/+   kg

29/31 kg

€ 1.40

Steady

Bulls 25/29,5 kg 27,5/28,5 kg 22/ 27 kg 25/26 kg € 2.00
Steady
  30/39,5 kg 36,0/37,0 kg 24/34 kg 31/33 kg € 1,85
Steady
  40/+     kg 45,0/48,0 kg 34/+   kg 38/40 kg € 1.60
Steady
Thirds 15/+      kg 25,0/27,5 kg 13/+   kg 24/26 kg € 1.20
Steady
Thirds bulls 30/+      kg 38,0/40,0 kg 24/+   kg 33/36 kg € 1.20
Steady





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