What happened this week: After the decent round of general activity in the last week things cooled off again this week. Some will not agree, as most of Europe was busy trying to renew the ongoing regular program sales to the European customer base this week, however this is normal action and cant be considered as anything special. The negotiations are always tough, but this time it is even harder. At the end of today were still a lot of deals open, because buyers and sellers could not agree on prices. The gaps are not really very wide, but with the insufficient margins processors have, they fight for the last cent and tanners feel comfortable to dig their heels in expectations of the upcoming summer holidays. They believe, that their position is comfortable expecting, that sellers don’t have too much options. It is true and also not. The low kill and reasonable export interest keeps alternatives for hides to overseas destinations still open, at least talking about hides up to 40 kgs. Above, that number alternatives are definitely less, but so is

the kill. The trump some tanners fell to have is the entire shut down of most of the furniture related tanners between the weeks 29-34. Some feel, that this should discipline sellers enough to follow the price ideas of the buyers. The outcome remains uncertain still, because it really depends much now of the individual position of everyone. In general, however it seems that agreements will be found at the moderately increase levels we saw already last week. Apart from that, activity was slow. Interest is there, but – as expected – the try to put prices up failed in most cases with buyers around the globe refraining from buying at higher price levels. Bids from Asia were again available, but below asking levels and so little business was concluded, because the usual weekly help from the currency market did not take place. So,  with every one, whether buyers or sellers being comfortable positioned nobody was willing to move for the moment. The good news were, that L/Cs are coming in a bit better again, most likely related to the lower kill in the USA and the threat of further

declines due to the uncertainties related to the BSE cases. However, with shipments to Asia going to be better again warehouses will stay fairly empty also over the summer, what will keep sellers comfortable, subject the kill stays as low as it can be expected for the coming weeks. The kill: Finally we have reached the low levels of production we expected for a while. With school holidays starting in the North and more and more regions following until the end of July, kill will stay low for some time.  Weights should be or should have passed their lows, while weather is good for hide processors and the quality and bad for holiday makers. What do we expect? The market remains deep frozen in the narrow price ranges. Any fears about the market may be lifted, but the market is not ready for a rise either. Just of shipment schedules cant  be met from other origins we see a fair chance for another flurry of interest from Asia to cover against missing hides what might help. Europe will go dormant soon and so there is little chance for any major surprises on either side for the next week(s).