Chinese deadline approaches

Kills eased off in early May as expected at this time of year. These lower kills should continue until late July at the earliest. Despite this prices fell back in May for a number of reasons. Firstly the weakness of the US Dollar which lost 8% of its value against sterling between mid-March and mid-May, has and will continue to put pressure on the market. Secondly the anthrax problem in Wales has resulted in DEFRA not issuing health certificates for hides from the UK destined for China. It is expected that hides will not be able to be exported to China until six months after the last confirmed case of Anthrax which will if no new cases are confirmed, take us to near the end of 2006. Thirdly and most importantly, the deadline for the imposition of the import tax into China is fast approaching and the frantic buying by the Chinese in the first four months of 2006 is coming to an end. When the Italians realise that they are the only show in town then the pressure will really be brought to bear on the hide market. Even the Chinese are predicting an extremely weak situation by August when the Italians go on holiday as Chinese imports show that 1.3 million more hides were imported into China in the first four months of 2006 compared to the first four months of 2005. Prices for hides in Ireland had fallen to the following levels by mid May: 36kg+……............................................................... 85p 31/35.5...................................................................... 91p 26/30.5 ................................................................ 1.02 22/25.5..................................................................... 1.05 Cows remained steady at £28 ex yard. However, a build up of the older cattle destruction scheme hides continued while hide markets and processors in the UK awaited a directive from DEFRA on the movement and usage of these hides. If, as logic would dictate, these hides are allowed to go forward for wet-blue then a large tranche of wet-blue hides will come onto the markets. Current stocks of these hides are thought to be in the region of 40,000, and growing daily. New season doubleface business has started with a whimper rather than a bang. First reported sales were at £4.50 delivered Istanbul quickly falling to £4. With the kill in England expected to come online towards the end of May prices are also anticipated to fall.