What happened this week: The most exciting development during this week was the sharp decline in the currency market. The USD hit new lows against the EUR and reached 1,20 – as everybody knows. So, whatever kind of improvement one may have seen in the market was destroyed by the ever weaker USD. European buyers lean comfortably back knowing, that their position is getting stronger and overseas customers don’t bother about currency fluctuations anyway. However, despite the squeezed calculations demand was also this week reasonable. Interest came again predominantly from Asia. We mentioned already for a while, that we feel, that the price gap between US steers and their European counterparts is far too wide. It seems, that also some Asian tanners started to consider the same and for the first time for long the first bids and sales for bulls have been effected. Not at brilliant prices, but definitely an alternative to the massive price pressure executed now by the European tanners which try to use their production break over Xmas for the argument to reach further falling raw material prices.

Consequently further inventory was placed in the market. What remains is the fear of individuals. Many processors have to resolve the problem to need constant sales and shipments and don’t see any light at the end of the tunnel yet. For many years they did not need to take care as the European customer base absorbed steadily the production. Today – at least for part of the grades and for the present time – active selling is required again. A new experience for some. Dairy cows and low grades found also this week buyers in Asia and also some bidding from Italy was noticed. So, business in total was nothing exciting, but enough interest was available to move the weeks production of the main articles. A nightmare remain the sidelines like extra light kips and calf where still no interest can be determined and stocks continue to increase. It seems, that we still have to hope for the change in the fashion season and for a recovery in production of these articles, hopefully latest by February 2004.  Also low grade wetblue hides can only be placed at blow-out price levels, if at all. Also a clear sign, that the market still has to digest inventories and operations which run well are not focussing on the lowest price, but on the raw material with the least

production problem risk potential. So, at the end the market is still unsettled, but the hides unsold and the European structure are still struggling to reorganize to the realities of the global market. Prices have remained almost steady on the sales made. The kill: The kill remains steady on the levels of the previous week. Cows and heifers continue to dominate the slaughter mix and fortunately weight avg. remain on the high side. Interesting were todays news, that the EU has become in 2003 a net importer of beef, which is dominantly deriving from South America. This information supports the idea, that the decline of slaughter within the EU could slow down in the coming year. What do we expect?: We have no reason to change our opinion. The market will just continue as it is. In the coming weeks we will have the last showdown with the European tanners for this year and it will be tough again to find compromises which meet the opponents ideas. On cows less, as the market seems to be settled, but on bulls buyers ideas and sellers possibilities seem not to meet easily. The price trend for cows seems to be steady while on bulls the abattoir negotiations will determine the room for the final downward adjustments. The currency market will also be a factor again.