Market report 27.05.2022

What else is there to report in these times and market phases? As always, when the market here has to adjust downwards because the international markets make it necessary, it happens too slowly and with unnecessary resistance. The facts do not change, neither do the calculations, and the fact that we are at the end of May and thus before the summer period does not change either. As a seller, everyone is free to withdraw from the market, store the goods and bet on an improvement. For those who don’t want to or can’t do that, however, it makes relatively little sense to try to force prices and sales that the market doesn’t want to, doesn’t have to and possibly can’t pay at the moment. This is how the situation has been dragging on for weeks. Sellers are trying to support prices and the market with the argument of the lower kill and the reference to individual sales of special items, and buyers are aware that there is no lack of offers and goods in the next few weeks to be expected. So everyone waits until the last moment, concentrating only on deals with core suppliers and where deliveries are absolutely planned and needed. This, however, prevents a really solid price determination, which would only be possible if the market were really balanced in terms of supply and demand and the prices at the slaughterhouses were even close to the market reality. Such situations are not new and always lead to a very broad market view, which is then reflected in a very wide range of price connotations that are published. This is less pronounced in the case of cow hides, that they simply have to align themselves much faster and more closely with international

market prices. With bull hides, the slaughter industry still tries to create a special status. Unfortunately, it is always overlooked that here, too, economics cannot be ignored forever and that male hides have simply moved much too far away from international price levels. Provided one maintains a trusting and realistic relationship with one’s regular customers, the usual programmes had to be re-contracted this week. If one was prepared to take market realities into account, then continuation was possible over the next few months and this meant that discounts of 10-15% were necessary for cows and 5-10% for male hides against a month ago. I does not necessarily correspond to the actual market price, but is a level that could be agreed upon between regular customers and suppliers for the next few weeks. This means that, at least for female hides, we are slowly getting back to the price level of 2020, which at the same time means that there are already different types of hides that are at least as attractive for the production of collagen as for the production of leather. In other words, there is at least one sales channel for some of the product today, which does not necessarily have to be in the leather industry. However, if the supply increases in that area, then of course it also leads relatively quickly to a balancing of the markets there. Overall, however, we still have the impression that there is still some unsold product on the market despite the low kill of the last weeks and months.

The kill

Slaughterings were of course correspondingly low this week due to the public holiday on Thursday. The difficulties in finding a reasonable balance between the price for live cattle, the calculations of the beef industry and the price expectations of the food retail trade remain. The average weights of hides continue to fall within the usual seasonal framework and next week the number should recover.