What happened this week: The market tried to sort out the problems of the previous week. Until mid of this week the USD decline continued when profit taking on the  US currency took place and the USD was able to recover a bit. The problem remains, that the market does not really know where and how to settle. At this time of the year the European  tanning industry has mostly covered their needs until the holidays and with the constant pressure and decline in USA and now also in Australia etc. tanners feel scared to commit, despite many feel, that prices have reached interesting levels on a long term basis. A classical market situation where emotions are running high. Tanners with a good order book try now to hit the bottom to generate the maximum from the present market decline, while the others with insufficient orders don’t really care as they have little to loose. The biggest problem in Europe and in particular in Germany is the very low kill. This creates the perverted situation, that

prices were falling with low kills. Those suppliers with regular outlets are fighting with missing kills to fulfil their contracts, while the few others which might have missed the boat are flooding the market with offers in the attempt to minimize their market losses. This creates the classical bear market situation where the impression about availabilities of hides is entirely different from the real physical inventories. This can also easily be seen by a lot of traders and colleges interest to cover short sales now as everyone knows, that a delay of shipments or the request for extensions will immediately be followed by a cancellation. The weird thing now, that more hides have been sold in the past weeks than produced and profitable short sales will not be delivered due to missing production. Certainly nobody will complain as nobody is going to loose. Tanners get out of more expensive contracts and sellers haven’t had the hides anyway. It will just leave those who missed the boat as many tanners will not try to cover missing shipments

quickly in the expectation of further bargains. Sales were light during this week and only coincidental sales of cows and ox/heifers were concluded. Germany had a short week due to another holiday on Thursday and many took the chance for a long weekend. Next week is buying time again and after the collapse of van Buren everyone wants to know the effects on abattoir prices before they get back to the market. The kill: A very low slaughter again. Thursdays holiday curtailed slaughter again massively and the production gap is further widening. If we want still to meet this years targets, that we need a huge increase int eh second half. So far the decline has already reached abt. 15 % against a year ago.. What do we expect?  Next week not much will happen until the buying prices are not clear. The market will continue to struggle, but sooner or later the low kill will show consequences. After the correction of prices to world levels – and this will not take too long – the rules of supply and demand will return to dominate the markets. By mid June most of the turmoil should be sorted out. Normality will return - as usual