What happened this week: Chaotic is certainly the best description of the situation during this week. As often the hide market requires outside influences to sort itself out. And this week we had plenty of it. The bankruptcy of one of our Dutch colleges came as a bang and the first BSE case in Canada was not less important. This all combined with a further rapid decline in the US$ value added to an explosive mixture. The European market and in particular Germany and Holland displayed a situation where the word panic would not be exaggerated. Further bad news from the Italian furniture tanners and the influence of the weak dollar led to a loss of nerves and so all kinds of prices and here mainly low ones were thrown around the market. We fail to notice any trade of hides of any substance in Europe with sellers trying to move product not finding hardly anyone who was interested to buy. Mainly heavy cow hides which in the past months have been mostly sold to Italy did not find

any home at all and tanners were not shy to bid up to 20% below the prices which still had been concluded in the past weeks. This was then too much to find any victim between the sellers. Due to the very low kills in bulls males had been much less effected although also here availabilities of suspicious origin have been noticed. However genuine product of premium quality remains in short supply and supply bottle necks remain the case. A bit different was the situation in Asia where still decent demand was noticed and if the US $ was quickly covered still acceptable prices and levels in sales could be concluded. Certainly supported by the fear that the BSE problem in North America could lead to shipping problems and a reduced kill. We also received further inquiry for low grades which however were difficult to meet as the prices were quite low due to the weaker dollar and the competition from other cheaper origins worldwide. The concerns about the export business from Europe in leather and leather products continue to rise and for European

tanners is getting increasingly difficult because their European markets are sowing down due to the season and their competitiveness in overseas business is rapidly fading if not already gone. In their view all this can only be resolved by further decline in raw material prices. We feel that this might be the definite start for the structural changes in the European tanning industry. The kill: The kill was again massively reduced this week due to the attempt by abattoirs to lower life cattle prices and the low season of dairy cows in general. It looks that the situation will continue - as usual - at this time of the year. What do we expect?  It is difficult to find any reason how the negative price trend in Europe can be stopped with the ever falling value of the US$. Without a change in the currency market or a substantial rally in the USA the values of most European hides require further correction. The extend of the same will depend on the correlations which have to be made with the prices and the markets overseas. Under present conditions we consider the potential for a correction between 5-10%.