What happened this week: The market and the opinions are pretty divided this week. Some are calling it quiet and believe, that the heat is off, are others still finding activity quite reasonable and demand more than sufficient to dispose of the increased slaughter productions. Well, as usual the truth might be in the middle. Watching the European market the pessimists are in the majority. Arzignano is facing big difficulties with the affluent plant at present, the Tuscany seems not having started yet into 2004, same applies to Spain, not to mention the payment delays one is facing from the South of Europe at the moment. So, the Southern European  business and market is certainly no joy at the moment and those who mainly focus their sales and activity in this part of the world will not be too positive . In the Northern parts of Europe the business situation is quite normal and most productions are running according to schedule. But, also here many are concerned about the future, because the great upswing in the economy is still more forecasted

than it has arrived and consumers keep their wallets still rather closed. The strong EURO is a big threat for most of the European tanning industry and is making plans and projections difficult and uncertain for everyone who is not producing and sourcing globally. However, for the moment all this is compensated by the constantly rising interest from Asia. Albeit the disorderly and hectic buying of the past weeks has come to an end, interest remains strong and sales continue to be way higher than normal to this destination. So, our assumption that the shift of production already seen for long is going to be followed  by the logic of sourcing, is in full swing now and substantially amplified by the ‘Mad Cow’ case in the USA. In addition to the number of new clients contacting us, export sellers had the benefit this week of the sharp correction of the USD value, what was helping calculations this week as much as they were burdened many weeks before. At the end sales were pretty good again with most of the sales again going to the Orient. Interest was focussed on cows and

ox/heifers, but also further trials in bulls were as well concluded. Prices were steady with some increases still obtained for cows. The price gap between overseas and European markets continues to widen due to the different market conditions as stated above. One has to worry how far the discrepancy between the regions can develop in the coming weeks. The kill: The kill continues to remain on the high side, but the increase is almost entirely in the female section. We cant see this to be related to beef demand and how long this is going to last. Anyway for the moment numbers are good and it seems for the coming week(s) this is going to continue. For the production year 2004 latest news delivered reduction forecasts of slaughter and cattle herd of abt. 2 % What do we expect?: Asia is now going to shut down. This will calm matters a bit. Europe does not seem to have the demand and strength to compensate this in the coming weeks. If the correction trend of the greenback continues the market will gain strength from that side. In total, we believe, that the near future will see a steady to firmer trend in Europe, if the US market does not deliver any sharp changes suddenly.