Market report 23.09.2022

RE070122a

Osterhorn, Friday, 23.09.2022
The US $ in EURO 0,9720

What happened this week

Now the long-awaited trade fair in Milan has drawn the curtains and, as is so often the case, the knowledge gained varies greatly. One thing, however, remains as always: Milan remains, and here especially through the Italian tanneries, a festival of ideas, creativity and beautiful leather and is not the place where you have to worry a lot about industrial mass products. If the sun is shining and the temperatures are pleasant, almost all faces seen in full, everything actually seems like before Corona again, with the war far away, then just visiting the fair in Italy is a general mood booster. Beyond that, there wasn’t really much new or surprising to experience. The market segment that the Lineapelle serves clearly faces fewer problems than the rest of the industry. Luxury, high-fashion, niche and quality have the same cost problems as everyone else, but the added value is clearly much higher and the problems are correspondingly smaller, with a customer bases which does not need to count the cents for the basics of life. On the surface, all this left a positive impression of the three days of the fair. However, the picture turns very quickly when one meets representatives who represent mass production. Large volumes with low added value combined with sharply rising costs are not a particularly healthy combination. This is of course particularly true for Europe as a production location, which is currently most affected by all the problems. Those who are particularly struck must either hope that governments or a miracle will save them, and this affects the entire supply chain from farmer to retailer. So once again the fair had something for everyone and the good

thing is that the focus was not on the supposed disaster but on the glimmers of hope. Since almost everyone is still trying to keep their production at a normal level, everyone with stable customer relations was able to sell at least enough so that they didn’t have to go home empty-handed. Apart from high-value calfskins, however, everyone else quickly had to realise that the idea of using the fair to push through higher hide prices would not be crowned with too much success. Even if the currency situation did not play such a big role at the fair in Milan, the weakness of the euro is at least a small help for all those who can or want to sell part of their production on overseas markets. This applies to raw material suppliers as well as to the leather industry. The bottom line of the week can probably be summarised as follows: the outlook for mass-produced goods and the middle and lower price segments is very gloomy, while for the rest of the year the outlook for the higher end in the quality segment still remains relatively stable. Of course, all of this is always subject to the proviso that cancellations do not suddenly occur in this sector as well, or that Christmas retails sales worldwide fall significantly short of expectations in this area as well. Only a successful sale will provide the necessary liquidity to avoid another new problem in 2023.


The kill

The kill did not increase further this week. The meat industry in Europe is also struggling with many problems that are weighing on production. If you look at the distribution of production, the low share of fattening cattle in the numbers was noticeable. In our case, this applies especially to male animals. The proportion of them slaughtered last week was exceptionally low, but this only shifts the volume, because these animals have to be slaughtered within a certain time window not too far away. It is still early, but in the coming month decisions will have to be made by the farmers and the slaughter industry.

What do we expect

In any case, the big price collapse has fortunately been postponed for the time being. Nevertheless, prices are under pressure, depending on the type and hide type, with the exception of the absolute top qualities. For the moment, and with the support of the currency, it was possible to keep the markdowns within narrow limits. However, the decision on the further course of the market has  been made and it will only become clear how the overall situation in the hide market will be dealt with when the kill increases further. On the demand side, new impulses can only come from Asia and here we still have to wait for the impressions of the Party Congress in China. Europe alone can not absorb the seasonal rise in hide supply.


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 € 0,85 Stable
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 Stable
Bulls 25/29,5 kg 27,5/28,5 kg 22/27 kg 25/26 kg € 1,10 Weak

30/39,5 kg 36,0/37,0 kg 24/34 kg 31/33 kg € 1,20 Weakish

40/+ kg 45,0/48,0 kg 34/+ kg 38/40 kg € 1,15 Weakish
Thirds 15/+ kg 25,0/27,5 kg 13/+ kg 24/26 kg € 0,45 Stable
Thirds bulls 30/+ kg 38,0/40,0 kg 24/+ kg 33/36 kg € 0,55 Stable