RE070122a

Osterhorn, Friday, 24.06.2022
The US $ in EURO 1,0530

What happened this week

A week in which there was a little more activity for a long time. Above all, we saw enquiries from China and the Middle East, which were almost completely absent in the past weeks, or could only be observed sporadically. However, it must be noted that there were no overwhelming movements, neither in terms of quantity nor in terms of prices, but: Something is better than nothing! The bids that were received were initially far too low and it then took up to three days to work their way very doggedly and gradually up to discussion-worthy levels. Nevertheless, the prices still remained below the asking prices and there was still a shortfall of USD 1.00-2.00 to be happy and reached our goal. In the end, the only decision left was whether to maintain deliveries over the summer or wait for a better autumn. In Europe, the situation is now relatively clear. Many tanners are either already covered until the summer, or the required quantities have already been defined and as a rule these are then covered with the regular suppliers. Quantities that cannot be placed in July will probably not find a buyer in Europe until September. The problem, however, is in August. Against all reason, the holiday period of the European tanners is increasingly concentrated in the phase from week 30-34, so that deliveries – especially of fresh goods – drop extremely sharply in this period and thus represent an extreme burden for the slaughterhouses and processors. The capacities for salting are not sufficient, also because, of course, holiday periods and school holidays also put a strain on and reduce capacities at this stage. Every year we discuss the issue again with the leather industry, but every year it gets worse. This year, of course, the tanners have to deal with other difficulties. Rising costs, high uncertainty regarding orders after the summer and partly also increased semi-finished

stocks. In Italy there is also an extreme water shortage, which could possibly limit production over the summer. Under these conditions, many suppliers are deciding less according to the market than according to stocks, which is why the price information is also very divergent. The ’spot market‘ certainly offers favourable opportunities, while the long-term, regular supply chains tend to be ’softer‘ in their movements. This situation brings a lot of unrest into the discussions, because it naturally leads to great uncertainties. Meanwhile, more hides are finding their way directly into collagen production. The sales in Asia this week were mostly concentrated on better qualities. Something that can be seen everywhere overall. The orders for the mass markets and the volume business in the middle and lower price ranges are either not coming or are obviously very uncertain. This is of course very understandable, because the middle and low incomes are hit hard by the price increases and products made of leather are not part of the necessities of their life. In Europe, the problem of energy supply and prices for both private households and companies is also likely to play a major role here. At the moment there is no certainty at all in the calculation and the only costs where we think one can achieve something at the moment are the raw hides. All in all, a better week on average in terms of sales volumes without it being evenly distributed and with the feeling that people are really buying against a real need for leather and orders.


The kill

No changes in the kill. Very hot weather in many regions, labour shortages, high price consciousness due to general rising food and energy prices continue to weigh on beef consumption. The holiday season is now upon us and this will not be positive for slaughterings either. Obviously, however, there is sufficient supply of male life cattle.

What do we expect

Even if this week provides a slightly more positive picture overall, we do not believe that the fundamental problems have been solved. In the end, it remains the case that demand for leather needs to pick up significantly, especially considering that the kill in Germany has been far below average in recent months. At the moment, the impression remains that people are mostly buying for production, or they don’t want to ‚miss out‘ on cheaper prices and are just buying a little extra. For the next few weeks we will need further support from Asia if the situation is really to stabilise and the trend is to reverse.


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 € 1,20 Stable

25/29,5 kg 27,5/28,5 kg 22/27 kg 25/26 kg € 0,80 Weakish
Dairy cows 15/24,5 kg 22,5/23,5 kg 13/22 kg 20/21 kg € 0,70 Weakish

25/29,5 kg 27,5/28,5 kg 22/27 kg 25/26 kg € 0,60 Weakish

30/+ kg 33,5/35,5 kg 27/+ kg 29/31 kg € 0,55 Weakish
Bulls 25/29,5 kg 27,5/28,5 kg 22/27 kg 25/26 kg € 1,20 Weak

30/39,5 kg 36,0/37,0 kg 24/34 kg 31/33 kg € 1,30 Weakish

40/+ kg 45,0/48,0 kg 34/+ kg 38/40 kg € 1,20 Weakish
Thirds 15/+ kg 25,0/27,5 kg 13/+ kg 24/26 kg € 0,50 Stable
Thirds bulls 30/+ kg 38,0/40,0 kg 24/+ kg 33/36 kg € 0,50 Stable