What happened this week: A bit of an odd week. Although the total number of sold hides was good it cant be called an easy and good week. Sales were mainly boosted by the regular program buyers which were on the list this week, but prices negotiations were extremely tough and with the insufficient declines seen at the abattoir this month margins remain very squeezed and selling is more difficult than ever. But everyone is trying to do the best and so compromises have been found with most of the customers. Dairy cows were mixed and showed what we had seen already for a while. Italy is in the doldrums while in Asia these hides catch more and more attraction. To a lesser degree in Korea, even though the market is open for German hides but much more in China were the German dairy cow gains more and more interest from the upholstery tanners. Considering the price spread vs. alternative hides it can be easily understood and when somebody needs product of this kind it is a good choice. We would say that not too many containers had been sold but the interest is consistent at reasonable levels. A bit of an headache is the present abattoir buying

and some tanners attitudes at present. In the first case we have one player obviously on expansion tour with the price consequences we have seen. Most players find it difficult to understand the timing of the operation and wonder what they (we) are missing to know. In the second case we find it most disturbing that various tanners of good reputation loose a bit track handling their present problems. We can only hope, that this a contemporary habit related to the entire confusion, as otherwise we are heading towards difficult times in which market conditions will fully command responsibilities and revenge is the basis of a relation. Most people one speak to these days sound pretty depressed and loaded with problems. However, we still also find positive news although with most ‘the glass is half empty’. Shoe leather business is not bad in Europe and also upholstery shows better feels in this part of the world. Considering that also domestic China is doing quite good it is better than nothing. One day not too far away also the US companies cancelling their orders now may feel that it could be dangerous to cut the pipeline rigidly. With nothing in hand, no sale for sure. Not mentioning

that hide prices are not too far away from allowing attractive leather prices again. This is even more important at the beginning of a production cycle and during the period of the important shows.  The kill: Getting better now and further rising to seasonal, expectable levels. We have no reason to believe that the numbers will change over the next weeks. Weights remain light for the time of the year . What do we expect? We are loosing company in our views that the correction is still in play but the phase is heading towards its end. However, we remain of the opinion that things will straighten out over the next 4-6 weeks, not knowing how far the pendulum is still going to swing. Leather productions are going to improve over the next weeks and hide prices are becoming more attractive. So the pressure short term persists and prices may slide somewhat further. The extend, however is in our view limited. Cows seem fairly priced and find also good interest. The movement of bulls into the European customer base seems also adequate now, so that price variations might be more caused by adjustments of markets and origins and we still think that spreads between markets are still too wide. All this under the condition of no further rising political insecurity.