What happened this week: Hibernation might be the right expression for the market this week. Apart from the fact, that tanners interest faded and sales were slow - limited on specialties – also sellers disappeared trying to avoid any decision due to the uncertainty about the progress of purchasing levels at the abattoirs. Next week all over Germany new prices have to be fixed for the coming month(s) and with abattoir levels being 10-20 % above market levels everyone worries, how, if and when a readjustment can be expected. So the  greatest excitement and interest this week was not related to the question of the balance between supply and demand for hides and skins, but much more on the events on the financial markets. Further news about ‘creative accounting’ in the USA send the USD and stockmarkets to the South and was raising renewed questions about the solidity of the global and in particular the American economy. Although the markets recovered from their shock to a certain extend until the end of the week everyone has to remains on high alert. also The tranquilizing media optimism of the G-8 summit about the prospect of the world economy can not reinstall full confidence. Germanys

Rose in June to the highest level for the past three year and the increase was even more surprising as it came in a time of the year where numbers traditionally fall. What more can be said about the German hide market? Ignorance commands. It seems, that many players are simply not accepting the fact that the calculation of European hides today is entirely different from the situation 4 month ago. While German hides were economical in the first quarter they overpriced today in the context of the global resources. Instead of accepting simple facts and the attempt to bring prices back into line with the  global price structure many in the trade rather burn further wealth in private enmities. Structural problems and insufficient supplies are not enough to justify the present situation and tipping repetitive at the ‘unlimited’ demand from the premium car brands is not a sufficient justification for the price structure of the entire cocktail of hides produced by an abattoir. What else was of interest this week? Despite of the seasonal slow down in activity we hear about, have and feel delays in shipments to the Far East. We fail to judge yet, if this is just an individual case of few isolated tanners or already a further signal for a

general reduction in demand. If that is the case a further decline in prices has to be considered. The few sales generated during the week were on low grades and light weights in the specialty section. Fortunately various tanners still need prompt shipments to fill the last production holes before the holidays , so that at least product can still be moved. The kill: Most probably the lowest levels now for the year. Consequently numbers and weights cant get any worse and we expect this now to last until mid July. The real recovery, however should not be expected before second half of August. What do we expect? Except top quality heavy hides which have become a specialty product for one market segment we are just waiting for the market adjustment. With the low kill and a reasonable coverage with sales, sellers are not yet forced to lower prices in their offer list. Heavy cows and heavy bulls do not feel any substantial pressure yet, but all other grades are way out of the market and will sooner or later have to return to realistic levels. We consider these to be 10-15 % below today’s official price list. Further developments will then depend on the currency market as well as on the real demand situation from Asia as the European tanners will not be a factor.