Market report 19.08.2022

The focus these days is clearly on the weather. Too hot, too sunny, too dry, too little rain or too much rain. Depending on where you are and what you have to do, opinions about the weather vary widely. Since the majority of people are still on holiday or in a holiday mood, there is not much else to occupy their minds. The escape from unpleasant realities is supposed to work at least during the few weeks of rest. Accordingly, business activities this week have been more concerned with administrative, maintenance and organisational issues than with discussing the hide market. However, those who do not want to take a few days or weeks off from business now have to deal with the changing environment very quickly. Calculations have to be reconsidered; at least in Germany, energy costs will rise considerably for at least the coming year. In the case of electricity prices, it will hit everyone sooner or later; in the case of other energy sources, it depends to a large extent on which one is chosen. The problem for today’s business is that the world market and the processing for hides and skins are not based on costs, but on the price levels dictated by the global market. Along the value chain from slaughtering to the finished product, there are sometimes very energy-hungry processes built in, which make a reorganisation of pricing urgently necessary. The different prices for energy in the various countries will almost certainly be a very specific criterion for the business development and competitiveness of many productions. In the short term, there also remains the problem of water supply in many countries, and how quickly the problems of lack of rain

The kill

This week, too, there was little change in the slaughter figures. The level remains extremely low and an improvement can be expected in the coming weeks. The school holidays are slowly beginning to come to an end and the phase of extreme heat at least at the moment in large parts of the country has taken a break and the very fact that we go to the end of August speaks for the fact that it will also not come back as quickly and intensively. We therefore assume that the lowest levels have now been reached and that we will see a slow increase in production over the next few weeks.

What do we expect

We are relatively sure that there will be very little stimulus to the market next week. Certainly not from Europe and frankly it is hard to find a reason why Asian customers should suddenly develop a lot of activity in the next week. From this point of view, the regular programmes and the stable supply chains will probably talk and negotiate with each other, but we can’t see any demand beyond that that could give impetus to the market anywhere at the moment. This basically means that there is still a little bit more raw material being produced than the market is willing to absorb at the moment.