Extracts from the SauerReport

In Australia, the drought continues to cause serious problems for farmers. It also has an effect on the quality of hides and skins. Hides are available and the lack of export demand, mainly due to the quietness in the upholstery sector, may start to soften prices.

There are still a few offers in New Zealand but most skins available are third grades. Since meat prices are very high farmers go for animals which bring the highest return and are tending to keep their animals longer and to have more lambs and thus more animals to sell next season.

Meanwhile, the abattoirs are trying to get their hands on as many animals as possible, making for fierce competition.

In Europe, Germany saw first quarter overall slaughter down 15% but 22% in March alone and for April one expects an even bigger reduction. Bull slaughter within these totals reduced by 36%, cows only 5%! Not only is the slaughter down but a big tannery made a direct deal with a big abattoir leaving even fewer hides available for others to trade. Hide prices at the South German abattoirs are up 4 cents per kilo while none of this can be recuperated in the sales price to tanners. In the North prices are mostly unchanged although cows are still soft because of the disappointing situation in the Asian trade.

A private auction in the UK showed that hide prices remain practically unchanged. Sheepskin business has seen a good run on old season hoggets with a final destination of China. Prices obtained (£1.80) were better than was expected by some traders. There is very little interest in lambskins for new season doubleface. The same is seen in France.

French hides remain favourite in Italy. Prices are attractive now since the recent reductions and the hides have the big advantage of relatively easy to sell shoulders and bellies at good prices which makes the burden of the expensive croupon easier to support.

Interest for lower quality origins (Russia etc) is non-existent. If good European hides are not expensive, then why bother about low quality hides which are not even cheap?

Solofra shows more interest in the better skins from Syria, Iraq and South Africa in wet-blue than in Iranian material. Still trucks are arriving from Iran every day and stocks are increasing.

In France, a well known tanner, already in trouble for some time, filed for Chapter 11 in May.

In Portugal, exports keep driving the market, mainly to Spain and Italy. A few tanners have good orders which is good news of course! On the other hand carmaker Rover's bankruptcy did affect at least one major tanner who is now struggling to get rid of stocks planned to deliver to a Rover supplier. Lambskin prices keep going down.

In Spain, the recently reported modest improvement in new orders has been a tiny one indeed and is said to have dissipated completely. The Lineapelle fair in Bologna was negative for the Spanish industry and some called it the worst fair in many years.

Türkiye has been buying some Merino and Entrefino skins from Spain where stocks are consequently reduced somewhat. Prices have not changed and show differences from different suppliers as well as for different destinations.

The present season shows the usual reduction in doubleface skins and increase in nappas. One trader reports that if one has a chance to sell nappa skins better do it and not haggle too much about the price.

Türkiye is said to have stopped buying doubleface skins from France and the UK because of the current low quality. Many a claim has indeed been reported, a lot from China. Lambskins in France and the UK are not dipped which causes problems with infections and skin diseases which of course influence skin quality.

On a Turkish leather industry website we note an increasing number of skins being offered for resale.

In Bulgaria, lambskins are now down to e2 but no trader would buy any for stocks unless having firm orders from Türkiye on hand.

In Croatia lambskins joined the crisis elsewhere in Europe. No demand and very difficult to pin a price on this material. Basically people say e2 but it does not mean very much since there is no business. Demand for hides is irregular and switches from lights to heavies and vice versa. Cows are more difficult to sell than ox and bulls as is the case elsewhere in Europe. Hide and calfskin prices are basically unchanged.

In the Ukraine, all hide prices increased by around 5%.

Traders were surprised and even annoyed by the reluctance of African hide suppliers to reduce their hide prices. The fact is that Asian (mostly Chinese) buyers are not hot to buy at all at present and their price ideas are lower every day but still, in Africa, hide prices remained as firm as they were. Only mid May did prices finally start to drop. Many traders still have stocks in Hong Kong for which there are no immediate outlets. Hence, they see no reason to buy more and increase those stocks.

In Kenya and Uganda, there are problems with Chinese tanners not paying their Hong Kong traders/ suppliers. These in turn see their funds and business blocked and are unable to buy new parcels or, sometimes, accept new shipments of pending contracts. Exporters on the other hand may not be willing to effect new shipments before previous ones are paid.

Although in the recent past offers for wet-blue South African hides were hard to get, volumes are now said to be available to everyone who shows interest. The slow down in the world's car industry could be one of the reasons.

For Nigeria, the revival in the domestic shoe leather business serves the Nigerian leather industry well. Good quality and economical sheepskins show good demand as do good suede goatskins in both wet-blue and crust.

One cannot speak about a new wave in orders, however, and prices have not changed either. Steady business at steady prices would be the correct description of this market. Low grade skins are hard to sell.

Raw skin prices in the country are weaker but this is normal since the rainy season is starting and the quality is coming down. There will be fewer good skins coming to the market which, of course, supports prices.

In Tanzania, wet-salted hides have been bought at considerably lower prices than in previous weeks.

In Senegal a strange situation has arisen. Chinese buyers bid no more than US$0.72-0.75 for wet salted hides while shippers in Senegal are asking the equivalent of US$0.83 (in euro) without adding profit, costs, commission etc. Not surprisingly no new business was reported.

Yemen has postponed the export ban on raw hides until the end of the year. All prices have increased since the beginning of the year and some of the dry salted hide prices may raise some eyebrows.

In Egypt, prices have tended to soften except for buffalo. Through soft loans farmers are encouraged to breed buffalos and keep the baby buffalos instead of selling them young to the butchers. Animals remain under the project's supervision for one year to monitor results and profits.

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