What happened this week: Our underlying positive feeling we had last week started to fade during the week. The optimism which seemed to emerge during the Fair in Bologna did not find any additional support we assume, that everyone who took the chances in Italy has finally taken the right decision. The Asian buyers which were expected to return to the market after their holidays where not found in Europe, but moved the purchasing interest back to the US market which has reached attractive levels after the long period of eroding price levels. Price levels in the United States are not anymore prohibitive and when Asian tanners have the choice to choose between European and US hides their still prefer the American alternative. Sales were consequently concentrated on spot deals in Europe and some specialty products in wetblue and if one was looking for some serious success in selling he had to look for sheep and lambskins which entered their seasonal activity. Sales of cattle hides were consequently spotty and more a case of

coincidence than vital demand. Buying interest was focussed mainly on bulls and ox/heifers. Cows found little interest and some where reporting, that bidding levels from Italy have been reduced to pre-Bologna levels. Asia was absent also this week for cows and so it is very difficult to know where the market really is. As difficult the situation is, sellers were not yet particular nervous, because they were still in the process to negotiate the abattoir prices for May. The unnecessary sharp increase paid in April and the falling avg. weights  have never been compensated by higher selling prices and normally abattoir prices should decline again to return to normal operating margins.  Well, butchers don’t think this way and what they once got they don’t give easily away again. Consequently are the hopes for lower prices very limited and abattoirs feel also comfortable in their position referring to the sharply reduced slaughter levels at present. This outlook did not raise any enthusiasm within the sellers to think about reducing their asking prices yet to stimulate

demand. While the low kill supports indeed the market for bull hides is the cow market little impressed due the large number of alternatives available. Another burdening factor remains the ongoing pressure on finished leather prices what forces more and more tanners to continuously downgrade their raw material qualities/prices.   The kill: Slaughter number dropped again sharply this week and enter now the lowest period of the year. The first bottlenecks for fresh hide supplies are already surfacing and will weigh on supply plans for the coming weeks. We couldn’t be more wrong with our theory of higher slaughter due to the entrance of the new member States. With next weeks holiday on Thursday no improvement in sight.  What do we expect: Higher prices will be difficult to obtain, although needed due to the insufficient margins. Lower prices can not be expected due to the low kill and low inventories. So, anything else than a steady market would be a surprise. However, we change our view from the steady firm outlook on cows to a weak steady, while bulls are protected by the  low kill.