What happened this week: The market showed the classical ‘abattoir buying week’ situation – as we see it  now for quite some time again. The European trade is falling asleep as sellers want to know first how successful they are with the abattoirs before they take a selling position and buyers in a bear market disappear for the period in the hope that they can put some more pressure on prices and influence price levels in their favour. These rituals are pretty well maintained in a market with low speculative potential as we see it presently. So, the business concentrated either on running repetitive programs which required renewal or it was fully focussed on the sidelines which showed quite a bit of activity and the whole was garnished by some balance sheet related movements. So total trading activity was moderate with limited activity in the bovine section while trading and interest in calf/kips was impressively strong and sales for shipments still before Xmas were concluded. Positively noted where also incoming L/C’s from the Far East which keep the pace of shipments in December on a very high level and confirm the impression that also tanners in that region are not pessimistic about the

order situation for the first quarter of the coming year certainly considering the seasonal slowdown for the Lunar holidays in the Far East. Knowing, that the incoming L/C’s are for contract prices which are fairly above current levels it makes the positive interpretation even more easy. However, nothing is extremely special at present. The market is just in a pre-Xmas levelling out situation and one can see that many other international markets are also just in phases of re-adjustment to reality and so the big spreads seen in the past 6-8 weeks are narrowing again. In this context has also the result of the Zurich to be seen which came down for cattle hides by an avg. of 10 % while calfskins rose by 2-6 %. So also the Swiss hides continued the correction of the expensive hides and they look fairly well priced now. This is in line with our expectations about the price development of expensive hides and it seems to us that most way is made. North German abattoir prices fell only marginally for this month and the hopes for a chance to spread margins a bit have not been fulfilled. This leaves now no or very limited room for price adjustments and prices will be more driven by the individual position of the

seller than by general adjustments in the purchasing levels.  . The kill: The kill remains high and with the intervention for bullhides the number of males is very satisfying. Weights remain quite high what confirms the backlog of cattle what has been building up over the year. Female slaughter weights are also pretty high and this is reducing the availability of lighter weight dairy cows for the garment industry. With milk prices still being very good and no sign of any reduction farmers will most likely only slaughter what is in excess reviewing their milk quota. What do we expect? The year is reaching its end and we don’t expect any larger business anymore to be concluded. Regular programs are on the list and one or the other spot load will be concluded as usual. The only interesting question is when the Asian buyers will decide to buy for arrival after their holiday season. As goods have to be on the ship by second half of January they can't wait for too long, but they still have the option to wait until after Xmas if they play hard. This and the basically good kill increases the volatility of market in both directions. However, hides are attractively priced and in normal supply and so nor buyers nor sellers have a reason to be over optimistic about their chances except individual bargains available.