What happened this week: When we were happy last week, that May was over, it was because we did not know how June was going to start….. The abattoir buying ended in a decent chaos with competition ending in simple emotions and prices being not anymore calculated. The consequence is a commercial bloodbath with abattoir prices being easily 10-15 % above obtainable market levels. This had already to be feared with the market tensions rising over the last months and many – inlcuding tanners – trying to manage the lack of production with the old-fashioned and traditional tricky jungle strategies. So, one never gives up the hopes for a rational and pieceful solution, but it seems, that the trade needs this type suicidal activity in cycles  before the members understand the system again. So far about the problem to manage shortages and emotions. As far as the normal business was concerned the most impressive development was the sudden strength in the dairy cow market. Demand was strong from the Orient and buyers as

well from Korea as well from China were pushing for offers and sales. Bids climbed by another USD 2,00 per pcs. And the 50$ mark is getting in sight. As nice as the better business might be and as welcomed the return of the Asian customers after their long absence might have been, the delight was limited with replenishment costs for cows today being closer to the 60’s than to the 50’s. The weaker USD just added to the problem. As far as the other hide grades were concerned business was just normal with complicated discussion with the regular buyers. One has only the option to find insufficient price levels even for bulls with the regular customer base and to bear the losses, or to decide not sell and to hope and wait for further price increases. Demand in general was steady and stable in most markets with the exception of Italy were business was extremely quiet this week and also reports were not too promising for the remaining period until the holidays and the process of the relocation of leather manufacturing displays more and more in the concentration and contraction of production

in this market. At least in upholstery segement it does not seem that the Italians are going to share the Asian appetite for cows in the near future and we are curious to see if we will enjoy  the traditional round of buying from Italy before the holidays. The kill: Nothing special. For the season the kill is low but normal and the weights remain as light as they have been for a while already. There is absolutely no sign, that this is going to change shortly. What do we expect?  The biggest problem is now to find appropriate price levels for the hides after the surge of abattoir prices. We see a very limited chance only to get anywhere near to the levels which have to be asked today. While Asian buyers have other options to cover their needs we have to see how the European program buyers are now going to react to the new asking levels with everyone now trying  to minimize losses. The month of June is a lost one and we fail to believe, that the 8 months rise in raw material prices with hardly changing leather prices can remain with any consequences of any kind. 

For the short term, however hides will remain expensive.