What happened this week: Sales continued to improve during the week. The disappointing result of the Miami Fair had no negative effect on tanners decisions and sales increased with further gains in prices for cows and - due to the favourable exchange rates - also for bulls on the export side. Quality tanners in Europe were the driving force and they made sure to cover those orders they have or feel sure about. Since tanners margins for higher quality leathers are acceptable supply safety was obviously more imprtant than the ultimate fight for the price. Adding the total sales the sum  was  satisfying, but not overwhelming. Every request can still be fulfilled without too much struggle. The auction in Zurich was also showing moderate gains vs beginning of December and confirmed the process of consolidation and normalization. Interesting was the good interest from Asia in particular from Korea for side leather material, while the garment tanners remain still absent and it can only be hoped that they join the better market one day, so that they finally clean up their outstanding orders which still wait for L/C’s. If the market improvement continues some may find that their suppliers have

not the will to ship delayed contracts – due to better options. The sharp decline of the € late in the week made European hides even more attractive and although the export industry does certainly welcome the situation it may be questioned if the political scenery in Europe will cause at the end more trouble than benefits. The amount of interest and business from the Orient, also confirmed by the US export statistics, prior to their holidays is the biggest surprise of the week and raises the question if they just anticipate purchases to avoid the classical March/April rally. May be they have learnt the lesson to operate a bit more anti-cyclical. People who are involved in the Asian finished product trade we had the chance to speak to said, that they have at least presently no evidence for a return of larger orders. Thinking of our sales and shipping requests we also do not see any immediate need for hides and very relaxed and well planned shipping schedules without any hurry. This would also speak for an anticipating purchasing program at present and not for a significant increase in leather business. However, although we fell still quite relaxed about the market conditions the speculative tensions are  

growing. You can literally physically feel it, how various traders and even some tanners wouldn’t mind if the market would go for a little jump just for the sake of some positive short term effect for their business. The kill: The kill for the time of the year is a surprise and continues to be on the high side of the expected seasonal levels. This is helping presently to hold the market under better control. We do not dispose of any information, that the present situation changes, although the carnival weeks beginning of February normally show declines.  What do we expect? Well, the weaker € and the improving market conditions support prices. European hides remain attractively priced and they have a certain room now to rise. As already said speculative tension will add and one can’t stem against the trend. So moderate price rises have to be expected and accepted. The discussion will be, what one believes is moderate. So, for the coming weeks we expect prices to be a few more percent higher, but we still don’t believe in anything significant and it will depend a lot on tanners reactions and their real needs. Let’s hope they are not short supplied. In general we are exactly on our medium/long term forecast line and don’t see much danger to loose track