Market Report 10.05.2024

What happened this week

In addition to the Christmas period and the summer holidays in Europe, the first few weeks of spring are often a time when hardly anything worth mentioning happens on the market. This year is no exception. The only exciting thing to report at the moment would be the unspeakable stupidities that are currently being done with regard to prices at the abattoirs. The market situation and thus the price development is actually clear and therefore it is not unusual, but in view of the business situation it is hardly understandable what is happening to the prices at the abattoirs. It just shows once again that in many areas of our industry, commercial expertise cannot be the basis for business decisions. To cut a long story short, prices at abattoirs are not adapting to market realities. Prices for our competing hides, particularly European and American cowhide, are in reverse gear and there is little indication that this is just a short-term blip. It would not be particularly difficult to adjust their prices accordingly, thus ensuring that all goods could be successfully marketed over the summer. The situation is not much better for bull hides, although these are not necessarily in direct competition with other non-European hides on the same markets. This is more a question of whether the dominant clientele, which is still at home in Europe, can win successful and sustainable orders for their hides at current prices. While it is more of a direct price competition for cows from other origins, the question for bulls is whether sufficient sales can be achieved at the current price level in the long term. Well, everyone has their own views and ideas about this and this explains the current behaviour of some market participants. Those thinking in the short term may still see the glass as half full, with sales of hides from Germany over the winter period certainly satisfactory in the end. Those who see the glass as half empty will probably be more concerned with the question of how business will develop and how the main prices will develop over the next few months. Over the next three months, it will probably be very difficult to find many positive signs of demand and a reversal in price trends. Always based on these parameters, the current market behaviour can really only be explained by strategic hopes and intentions. Sales this week climbed once again or thereabouts. New bids from Asia are now increasingly levelling off at the level of alternative opportunities. This means that buyers in China have an idea that prices should fall by USD 3-5.00 as a first step. This is easily explained by the fact that similar price levels can already be seen in other origins. In Europe, business is limited to renewals of long-term contracts, and here prices are still moving very little, especially for the male product, but when they do, they are certainly not moving upwards.

The kill

This week, with temperatures rising and many using the public holidays to take short breaks, kills remain at their reduced levels. Some plants are running at full production, but it should always be noted that this means four production days out of five per week. The meat industry is currently in a phase of upheaval in our country and opinions on business development vary greatly. Basically, however, people are complaining that there are currently too few animals and that they are only available at high prices.

What do we expect

At the moment, we lack sufficient imagination to visualise what one could do to change the market situation in the short term. The leather business is now entering its quieter phase and there seem to be more than sufficient stock salready available in Asia at the moment. There is also still plenty of time to stock up for the winter season. This means that only very attractive prices could serve as an appetiser for sales in Asia. In Europe, the market will probably continue to be sluggish, ensuring that all goods can actually be sold and that there is actually a demand for leather for all hides that are tanned. A different and new direction will, in our view, be some time in coming.