What happened this week: Pretty much what was expected. Things slowed down in activity but the demand pattern hasn’t changed at all. Interest and demand for bulls remains very strong and we have the problem now that the significantly reduced kill of males is creating supply bottlenecks. At the same time the kill for females remains very strong (including the cull kill) and we would not be surprised if it is more than what the European tanning industry can digest. So, without a re-opening of the markets in Asia we believe that supply is bigger than medium term demand for cows. Running deeper into the summer this could change because it seems that with the end of the cull kill and better weather farmers will not bother to sell cows at the present low prices but to hold on to them in the fields, to sell the milk and to wait for better times. The Zurich auction today showed for the first time in many month a severe resistance from the buyers side and the increased asking levels were not confirmed – at least not officially.

Overseas interest was neglectable this week although the firm USD midweek offered pretty good chances. Since only Japan and China are open for German hides, this might have been the main reason. An interesting unknown factor for the garment leather market is the limited supply of sheepskins at present. With the UK – due to the FaM situation – loosing almost all the season and other European origins being cleaned up in the meantime the question has to be raised if this will support the interest for bovine garment leathers again. Sheep/lamb have become quite expensive and hardly available now and manufacturers have to decide in the near future if they will change to cownappas or if they want to take the risk of not being supplied.  As we are a bit in the low season at present it has to be seen if this will have any effect over the next weeks. Auto sales in Germany have been down by 4,3 % in 2000 and we feel it will not be much better in 2001 with consumers watching fuel prices and postpone the purchase of new cars.

Within the trade generally we noticed for the first time in ages worries about the market situation.  The kill: The short weeks have the impact on the total supply. Cow kill is running at the same levels as the previous weeks while males are missing. Also hides weights have now started their seasonal decent and on bulls it can be said it is a rapid fall what is not helping the situation either in this segment. What do we expect? Next week we might get a better picture with everybody back to work. Korea might lift the ban for German hides, the shortfall of the kill of male hides should finally reach tanners supply situation and the we will see if the general mood in the trade was just on basis of a momentary doubt or if it will penetrate further. We think that the male market will remain well supported by steady demand and low supply and the cowmarket will stay under severe pressure until the Asian markets and here mainly Korea will open up again. We do not expect that the market will already reflect this next week in price changes but prepare for it.