Extracts from the Hidenet World Report11 May 2017
Country-by-country analysis from Hidenet.
After a long period of balanced supply and demand, prices in Argentina dropped at the end of April, slipping $0.03 for steers and heifers, and $0.05 for cows. In addition, slaughter is now greater than tannery demand, and the exchange rate is not conducive to generating export business. Steers and heifers were selling at $1.03 and cows at $0.92.
According to preliminary information, Argentina’s cattle slaughter reached 1.08 billion head in 2017, with a female participation of 42.0%. In the first quarter of 2017, little more than three million cattle were slaughtered, a figure similar to that recorded in 2015.
This is an increase of more than 20.0% compared with the previous month. At the same time, beef production in Argentina climbed by 5.3% year on year in March, to about 246,000t. The national bovine herd in March grew by 1.4%, which is equivalent to 717,000 head of cattle. The number (head) of cows and heifers grew by 637,000, steers and novillitos by 32,000 and calves by 20,000.
Towards the end of April, wet-blue prices dipped after a long period of no change. Most Grade A selections fell by $2.00 a piece, while lower grades dropped by $1.00 to $2.00. Meat and Livestock Australia (MAL) updated cattle projections for 2017, noting low female cattle slaughter and high carcass weights. It also confirmed January’s estimate of 7.1 million head cattle slaughter for the year. The country is rebuilding its cattle herd and will continue to do so until at least 2021.
Extreme drought reduced the nation's cattle population in 2016 to a 20-year low of 26.1 million head in June. The total is expected to hit 26.7 million this year and rise to 28.6 million by 2021.
Figures released earlier this month also revealed that Australia was expected to process 2.7 million fewer sheep this year. Mutton slaughters are forecast to be the second-lowest on record, while lamb production is also set to fall by 6%. Lack of supply led JBS to cease production at its Cobram processing facility. It may not be able to resume operations until September or October this year.
In April, the Bangladeshi Government finally cut utilities to the Hazaribagh neighbourhood’s 150-plus tanneries. The move comes after years of court rulings that the tanneries must treat their wastewater, shut down operations in Hazaribagh and relocate to the Savar industrial park on the outskirts of Dhaka. The move sparked processions, and tanners feared that the shutdown would lead to a loss of huge export orders for the country’s billion-dollar-a-year leather industry. Tanning, footwear and related leather organisations were preparing to file for compensation.
At the same time, figures were released that showed export earnings grew 3.97% year on year to $25.94 billion in the July-March period of the current fiscal year on the back of higher shipments of garments, jute and jute goods, and leather and leather products. Shipments of leather and leather goods stood at over $922 million, up 8.41% year on year, against the target at $894 million. Furniture exports rose 18.21% to just under $36 million.
Benelux bull markets were steady throughout the month, with 30–39kg selections trading at €1.89–1.95/kg, delivered to a North Italian tannery on a 30-day payment.
After the drama set off by Operation Weak Flesh in March, April was a quiet month. It turned out that the scandal did not greatly affect the leather market. International demand was good, with the automotive industry leading, but the footwear sector was still timid. Sales of tanned leather were tough, with customers insisting on discounts. Most TR1 traded between $1.25 and $1.30 CFR. For the first quarter of 2017, the country’s leather hide and skin imports jumped to
$9.467 million, a growth of 54.3% over the same period of 2016.
Salted hides and wet-blue accounted for about 75% of the total. Brazil records a surplus of $494.861 million in the trade of leather in the year, which shows a clear predominance of leather exports over imports in Brazil. Exports at the start of April were also up. During the first week, Brazil shipped 11,000t of leather, a 26.8% increase over the same period in 2016.
As of the week ending 21 April, year-to-date Canadian cattle slaughter was 793,671, compared with 2016 when it was 747,014, an increase of 6.2%. The weekly increase has been fairly consistent so far this year.
The Chinese Government is continuing its environmental and pollution check, which is affecting small tanneries the most, predominantly those in northern China. The inspections focus on air quality, and many small facilities use coal-burning ovens that are not up to standards, so they have had to close. Also, some small tanners in Guangdong and Fujian are being closed because their effluent treatment is not up to standards. No reports of major tanners being affected have yet been reported. A total of 5,600 staff are carrying out the inspections on a national level.
Leather exports in China in 2016 took a hit, dropping by 11.3%, closing at $76.4 billion. CLIA reported that total sales revenue in 2016 rose by 3.2% year on year to $212 billion. China needed to import 668,974t of semi-finished leather in 2016 worth $1.5 billion. Finished leather imports for the same period were 131,987t with a value of $2.1 billion .
Although winter is just beginning, bad weather is wreaking havoc on Colombian livestock. Several regions have already been affected by adverse weather, including two important cities, Manizales and Mocoa. Many farmers are having problems due to heavy rainfall, which is causing shortages in food for livestock.
Legal slaughter of livestock looks to continue its decrease in 2017. In January 2016, 317,514 cattle were slaughtered, compared with 277,638 in January 2017, down 12.56%. The figure fell again in February, as 256,171 animals were sent to the slaughterhouse, against 300,494, a reduction of 14.75%. January and February were the worst of the last seven years, with even lower results than in 2010.
The first batch of tanneries of the Al Robeiki Leather City project in Badr City, were launched and ready for the start of operations. The government plans to complete equipping five tanneries with all machines, said a spokesman, noting that operations would start by the end of May.
Finnish cow and bull markets were steady throughout April. Cows 30/32kg were trading at €2.30/kg, delivered to a North Italian tannery on a 30-day payment. Bulls 34kg and up traded at €2.50.
Vealskins were steady throughout April, rising toward the end of the month. As French croisier is expensive and mainly bought up by luxury houses, sellers had to focus on the white/black variety offered at €7.00/kg without major negotiation margins. The values of 8–12kg are increased, making it nearly impossible to close contracts, sending some tanners to other origins, particularly the Netherlands and Eastern Europe, for smaller sizes.
Luxury selections of 13kg and up traded at €7.40–7.80, and black and white of the same weight went for €6.80–7.00. The prices are based on delivery to a North Italian tannery on 30 days payment.
French cow markets were steady, although segmented. Low-quality selections were not needed and buyer attention was focused on the best grades, with increases achieved on some batches of origins, such as Italian. The most requested origins were those of Central Europe and Scandinavia. Sales of lesser selections in Hong Kong were stalled because Chinese buyers had presented counter-offers and the gap between supply and demand was quite high (about $4.00 a piece) and sellers are studying countermoves.
French Bretagne (32kg and up) sold for €2.10–2.15 and central French at the same weight for €1.90–1.95. The best bull selections rose in April with hides from central France, 37kg and under, selling for €2.40–2.45 and those from French Bretagne for €2.55–2.60.
The heifer market saw gains in the first part of April. Contracts were signed at €1.90/kg for 25kg and up Northern German heifers and up to €2.40 for the 24–30kg Southern Germans. The cow market was firm with stable prices, although there were few sales in the closing week. Northern German cow contracts were closed at
€1.65/kg for the 25kg and up category, while Southern German remained around €2.08.
For German bulls, April closed on a very calm note in northern Europe and in Arzignano. Unchanged prices in south Germany: 40–50kg and over sold at Arzignano at €2.22–2.25/kg. Earlier in the month, bulls saw the upside of the sales range drop a few cents as the automotive sector raised uncertainty for the second half of the year.
Production in Italy remained high during the month, mostly to the benefit of Northern German hides, with Southern German and Polish seeming to be less attractive for Italian tanneries because of high prices.
Lamb and sheep markets were unchanged throughout the period with 70/20/10 lambskins selling at $92 a dozen, pickled, and C2 lambskins at $60 a dozen, pickled.
Indian buffalo markets remained steady in April, even while a war on illegal tanneries was being waged. Crust (1.2–1.4mm) sold at $0.90ft2, while 0.9–1.0mm sold $0.82-0.85/ft2. As the crackdown continued, factories and tanneries were seeing a 20–40% increase in raw material prices. The country’s Council for Leather Exports (CLE) estimated that leather exports would hit $27.00 billion by 2020, from the present level of $5.89 billion, given proper encouragement and support.
Mutton and goat markets maintained steady prices in April. Muttonskins sold for $55 a dozen, pickled, while medium goatskins fetched $27–28.
Italian cow markets fluctuated during the month, gaining and losing €0.05 but ended on a stable footing. Cows at 30/32kg sold for €1.50–1.55, delivered to a northern Italian tannery on a 30-day payment. Bulls were generally stable, save a small upside fluctuation of €0.05 at mid-month. April concluded with 40kg and up trading at €1.95–2.05.
Vealskins were generally steady in Italy, thanks to their superior quality. Sales were not voluminous, mainly due to Easter and other holidays in the second part of April. Selections 18kg and up traded at €4.00–4.40/kg, while 18kg and under went for €3.90–4.20.
Kenya’s Ministry of Industry, Trade and Cooperatives announced its intention to start a leather clothes production line in the country, boosting the country's industry. Prototypes of leather clothes are being produced in India and will be introduced in Kenya.
At the same time, the government-backed Kinanie Leather Industrial Park Project was worrying small and medium enterprises, who fear they will be driven out of business. This has attracted interest from multinational firms dealing in the processing and manufacture of leather goods, which will enjoy direct, tax-free entry into Kenya. The park has reserved space for 15 tanneries, while leather products manufacturers have been allocated about 200 plots.
In Morocco and Tunisia, chrome-tanned skins were trading at $21.00/m2 for crust.
Dutch veal was selling at an average price around €5.20– 5.30/kg, even though it was being offered at €6.00. Selected small lots were sold at €5.80/kg. There was good interest in quality veal. Dutch cows lost €0.05 on the upside of trading during April, closing at €1.70
Movement was reported for several New Zealand selections late in April. Wet-blue ox lost $2.00 a piece with 24–27kg selling at $93.00 a piece and 27kg and over at $103.00. The lighter 20–24kg gained $1.00, selling for $89.00 a piece. Heifers and lighter cows were steady: 14–18kg wet-blue heifers traded at $75.00, and those at 18–23kg for $88.00. Wet-blue cow skins (18–23kg) gained $2.00 to sell for $73.00 each.
New Zealand lambskins rose dramatically at the start of the month, jumping $13.00 or more in one week. Later, the selection gained a few more dollars, holding steady late in the month at $50.00–52.00 a dozen, pickled.
According to a USDA report analysing beef production in New Zealand, the country will see a reduction in slaughter, which will be around 4.2 million head, although the amount of meat produced will be reduced by 6% to 611,000t.
Nigerian markets were steady throughout the period, with the top selection of goatskins, Category ABC, trading at €1.85/ft2. Among lambskins, Cross A traded at €2.80/ft2.
Cow and bull markets in Norway were steady throughout. Cowhides weighing 24–34kg sold for €2.70. Bulls were trading at €2.70 on 34kg and over.
Buffalo markets were flat in April. Crust 1.2–1.4mm sold at $0.90/ft2, while 0.9–1.0mm at $0.80ft2.
Sources from Paraguay who attended APLF noted a great interest there in wet-blue. Since the fair, sales prices have been firm, with TR1 at 1.35, TR2 at $1.25 and TR3 for $1.15. In the last days of the month, refrigeration increased their work and this improved the pace of production. After several weeks of low production, industry members there said that there were contracts to be negotiated, but at the same prices of previous weeks.
Steady prices dominated the Polish market. Cows traded at €1.80/kg for 26/27kg weights and bulls at €2.30–2.35 for 40kg and up.
Portugal’s Ambassador to India Joao da Camara said that there was good potential for cooperation between his country and the state of Tamil Nadu in the areas of automobile, leather and IT.
He said the visit of the Portuguese Prime Minister to the Asian nation in January this year at the invitation of his Indian counterpart, Narendra Modi, had reaffirmed a strong commitment to strengthen ties and build strong partnerships.
Top-quality South African lambskins were firm, selling at $200.00 a dozen.
After spending much of the month of April at steady levels, prices of Spanish sheep were in sharp recovery, thanks to a growing demand for skins for leather goods and high-end footwear, and to the high quality of the latest spring harvest. Latest sales saw an increase of at least €1.00 a piece for entrefino and merino, with the best double-face merino sheep sold for more than €15.00 a piece.
Lechal and lachaune selections also rose, while the 'tigers' used for garments and gloves were conditioned by the general weakness of the destination and, like domestic English skins, were unable to obtain increases. The gap between luxury and inexpensive selections was impressive. Cow and bull markets saw no change. 30/32kg cows traded at €1.75, delivered to a Northern Italian tannery on a 30-day-payment. Bulls at 40kg and up sold for €2.10–2.15/kg.
April was a quiet month for cows and bulls. Prices were unchanged at €2.40/kg on cows averaging 30/32kg at €2.55 for 34kg and up bulls.
Most of the month saw steady prices for UK ox, mainly due to a shortage of offers. Off-season production and cattle put out to pasture helped the sellers maintain high prices. Irish sellers were asking for more, but there were difficulties in terms of quality and the high percentage of third grades. By the end of April, UK and Irish 36.00kg and up sold for £1.65–1.68. For 31.00/35.50kg weights, UK selections sold for £1.75–1.78, while the Irish type brought £1.80–1.85.
After months of despair, the UK lamb and sheep market firmed, and even saw upside increases. Offers were at March levels, with a peak of £1.20 a piece for the new harvest’s lambs.
Uruguay’s National Meat Institute (INAC) reported that the country’s annual cattle slaughter was 685,661 head compared with 615,682 registered in the same period of 2015. Total official slaughter, though, was 606,657 head. The price of rawhides remained flat at $0.95/kg.
Beginning with APLF at the end of March, US hide prices dropped. Benchmark selection heavy Texas steers were at $70.00 just before the opening of the fair at the end of March, but by the last days of April, were trading as low as $64.00. The last week of the month also saw other steer selections plunge, including branded steers, which dropped $5.00 to $63.00 for 62/64lb, and Colorados trading at $60.00.
Heavy native steers ended the month down, trading at $71.00. Cows also slipped, with heavy native heifers at $55.00 on 50lb and up, and Midwestern natives trading at $44.00 on 50/52lb.