What happened this week: As almost everyone reported it was one of the quieter weeks in the young 2004. Beside the regular repeating business in Northern Europe activity was reasonably quiet. Just towards the end of the week we saw another flurry of interest deriving from the Orient. Not really a surprise, because most of the business in the last weeks was anyway driven by the Orient and useless to repeat how dreadful the situation remains in the European tanning centres of the South and consequently not too much could be expected from there. If one would like to notice a small silver lining then it was the first patchy interest again for light weight calf and kips which had been almost neglected for a long time. Hopefully the fair in Madras will deliver some additional good news for this type of material. Next week we will know more and we would need it. Heavy snowfalls and the end of the massive cowslaughter has reduced the kill in a dramatic way. What started already last week continued this one and in total the kill has dropped already by abt. 30 % from the highs seen in the first weeks of 2004. So far,

the market has taken little notice of the situation, but if this situation continues the regular program supplies could see some problems. Not, that this is surprise, but the constant and sufficient supply over the last months might have spoiled the market and it might have erased the memory, that beef production is not related to leather production. Anyway, may be other origins will compensate for the missing quantities in our area and it will not mean anything for the total market situation. Retail news from the German market were discouraging and confirming the bad state of the domestic economy. Shoe and garment sales fell by 4,5 % in 2003 and it does not seem, that things are going to improve shortly. Fortunately is world manufacturing not anymore depending very much in German consumption, but for those who were focussing on the German market it is an explanation why business was so poor in 2003. From the rest of the world, generally better news are received and most leading global brands continue to be quite optimistic about the opportunities and outlook for global sales 2004. Exporting companies in Germany are also reporting

good interest for furniture and cars on the export markets. The massive discrepancy between the domestic situation and the global market developments make the market judgements continuously more difficult.   The kill: The kill took a sharp nosedive . The extra kill of cows due to exhausted milk quotas came to an immediate stop which resulted in a fall of total numbers of almost 30 % vs. the peaks seen at the beginning of the months. The heavy snowfalls this week had additional negative impact. From all information gathered we have to assume, that the slaughter will remain low for some weeks.  What do we expect?: We believe, that also next week business is going to be uneventful. This should result in steady price levels before we don’t have an indication on the development for abattoir prices in February. We still fail to find a reason why prices should vary very much. However, if our guesstimate, that leather business globally is reasonable and the kill is going to stay low we would not be surprised if the market gets the necessary support to prevent from further corrections. Short term, i.e. next week however we cant see any influences  which are strong enough to move prices either way.