What happened this week: Trading and business activity was light this week. In Germany business was again interrupted by a holiday in the catholic parts on Thursday. Most companies took a long break, which included also abattoirs. Most sellers are already settled with their sales for the coming weeks if not months and the with kill being on record lows domestic activity was almost inexistent apart from the final long term programs which still had to be fixed for the month of June. Overseas demand – in particular again from Asia for dairy cows and ox/heifers – continued to be strong and with the change of the market tone in the USA and the firmer USD bids looked even more attractive than a week ago. However, due to the low slaughter and the forward sales of the previous weeks we decided to refrain from new offerings before a better picture about the kill is available. The Mediterranean remained difficult and more problems than fun or

business derived from this market. In general the market has arrived to the  phase  of consolidation after the long correction. Despite the all difficulties leather production continues and with the negative prospects a lot of forward sales were effected by traders and producers worldwide. As bigger the trader influence got as more pressure had developed with demand taken from the market delivering to many the impression, that total need for hides was more declining than it was really the case. The low slaughter numbers, however (Germany is down by at least 13-14 % this year) restricts the supply by so much, that – despite the gloomy situation – probably less hides are produced than in fact required by the standard productions.  That is at least how we read it. It is certainly premature to extrapolate, that this is the turn to a strong and firmer market, but the assumption, that raw material prices will fall forever, because leather demand and prices in Europe are so poor can be discarded. After such a long bear market many will

need to remember, that hide and skin supplies have no correlation with demand and so this applies also periodically to the prices. We consider, that the North Germany hides are presently adequately priced and their South German counterparts require still a massive correction in their negotiations in two weeks time to settle at acceptable levels. More market movement and volatility at present would certainly be counterproductive  for the leather business in these difficult times. The kill: A nightmare and not far away from the levels we have during the time of BSE. No idea if this is going to be better before September with the holidays in front of us. What do we expect? The consolidation is going to continue. A lot of pressure has been lifted from the market by forward sales and the low kill. However, we are still in front of the holiday season and European soakings will decline from now on. So, we have to expect a steady market with minor price fluctuations depending on the situation on the currency market, in competing origins and in the demand deriving from overseas destinations.