What happened this week: The week was shortened with some European countries on holiday on Thursday. Consequently also Friday did not show too much activity in the same countries and so some markets were neglectable in their activity. Generally the market is in a situation which can be seen many times under the same conditions. When the tone changes from firm to weaker some players change to their normal habits. The UK/Irish markets fall quickly and their sellers lower their offering prices daily and don’t sell. Italian tanners do the same with their bids and don’t buy and the others sit in the audience and watch. Many of the traders and tanners call this than the market, talk it into the doldrums and everybody talks about the virtual reality and nobody realizes what actually happens. Looking back into history we have seen often a similar scenario in May and this year it is just pronounced because of the normalizing world after the epidemics. While in the first quarter the whole world is working full speed things are slowing down from May onwards and

Europe is having the summer holidays and season changes in sight. So everything is changing just the gear. If this is combined with high cyclical prices or artificial levels like we had them due to the BSE and FaM situation than prices readjust. So far nothing special and many expected this. Now, just many tanners try to save too much and rumours about cheap prices are spread around. So, gossip rules and always when you check a story about a cheap deal you find something what explains why it was not  true or some needed facts were changed.  We found the week again quite active confirming that leather business is still good in the known sectors – at least until the holidays – and tanners still need to purchase hides. So sales in side leather material, calf/kips and better quality upholstery were good again with moderately lower prices. Bulls may now have lost 3-4 % from their peaks and cows 5-7 % so far. The weak EURO was supporting export prices again and helped to keep the declines under control. South German abattoir prices were not

yet fixed with packers insisting on only marginal declines which do not reflect the market situation. Tanners ideas of declines between 7-12 % -depending on the basis -are at the same time unrealistic yet and so the truth will be somewhere in the middle. Next week we will know more. The kill: The kill was much lower and – according to our expectation – mainly on cows. The intervention has finished and excellent weather keeps the cattle in the fields. We continue to expect much lower slaughter over the summer. What do we expect? We think the market is not yet fully settled and things need some more weeks to stabilize. This does not mean further sharp declines for our hides but many markets and prices have to find their correlations again. The related price movements will confuse many and may be misguide them. We are just in a correction of many factors and this will last until the summer. A new era (and we don’t know which one yet) can - in our opinion - only start in Sept/Oct. For next week we think that our prices will not move very much with the pressure persisting.