What happened this week: Well, the market was exciting this week, but it is divided into two or even more sections. Talking about the North/Central German market – and this is where we are in – sales and activity were very active. The total volume sold might be one of the best of the year. This was mainly related to the fact, that our hides are attractively priced in international terms and obviously many tanners got a clearer and more positive picture about their order situation and decided to cover much of their needs instead to continue to wait for cheaper prices. While the previous weeks were mainly focussed on demand from the Orient, this week was almost completely in hand of the European buyers and a lot of time was spent on combining larger bloc deals which were requested by the buyers. There was still also some business and interest  from the Middle and Far East but it was limited to individual customers specifically covering orders for shoes, garment and very cheap furniture leathers. So, sales into this direction covered everything from calf/kips over dairy cows to low grades. The weak € assisted again very much finding prices and securing revenues. The

sales to European customers saw for the first time in weeks also interest and buyers within the furniture leather tanners and it seemed that they received orders which they preferred to cover. Although we were not involved we heard rumours about dairy cows being sold to Italy at 5-7 % higher levels than those we heard during the Bologna Fair. In addition the strong demand from side leather tanners continued and sales of bulls and ox/heifers were impressive again – reconfirming the good impression we have from this market for some time now. Worrying is the situation in the South German market. Although it is clear already for some time that prices were overvalued and we had our doubts about the high price segments for a while, it seems - by defending price levels over the past months - higher stocks than desired have piled up and cause various processors quite some headaches now. Moreover tanners complain more and more about selection problems mainly in cows, so that a premium for this category is even less justified. Auto tanners advising a longer than normal production break are also not entertaining any optimism in the heavy bull segment. With the specific use of South

German material and the restricted customer base we do not expect too much effect on the general market and price reductions have more to be considered as a needed adjustment to reality. But it will certainly dampen much of the speculative optimism seen already in the trade after the recently better sales. The kill: The kill held up much better than what we expected and the declines were far less than our prognosis for the week. However, most of the kill is still in the female section and the kill of bulls is just about what it needs to be to secure fresh hide supplies. Heading now towards the Xmas break and the end of the year the risk of bottlenecks is fading What do we expect? We have no reason to change our general outlook. Short term we assume that prices will continue to trade in narrow ranges just with a solid base now.  A bit worrying are now just the rumours about eventual further military actions in the Middle East. On the basis of a stable situation we think, that european prices after the seasonal break should enter into a moderatly firmer trend. This considers a similar situation on the currency market as well as steady conditions on the other raw material markets in the world. Then European hides look continue to look undervalued.