What happened this week: When we expected last week business activity to be low than it was a tremendous exaggeration. Non-existent would have been more accurate. Isolated inquiries from the few tanners which have already returned from their holidays were the only activity seen. Also Asia was quiet – at least in our case. The rumours about a weaker tone in the US market and the general uncertain mood about the eventual influences of the oil price kept buyers in a wait and see position.  Traditionally are Asian tanners basically influenced by the trend of the US market and disappear immediately when they get the feeling of weakness in this part of the world.  The market is anyway in a very difficult period, because sellers are taking a firm position while tanners need  lower raw material prices and just buy what they need.  And not a single hide more.  In addition we are quite impressed by the increasing financial problems in China.  Letter of credits are opened with further delays and we have to realise, that more and more awkward

payment proposals are made. This definitely does not apply to the key players, but smaller importers and tanneries seem to be in more and more cash problems.  If this is the final result of the general government policy or the result of insufficient margins or sales has still to be seen and the trips to Asia which are scheduled for the end of this months will definitely offer more information on this subject.  The general trend for a weaker US dollar which was again accelerating on Friday afternoon is burdening calculations in addition to low weights and the low kill.  It seems, that still many in the trade are not yet recognising the deteriorating conditions and abattoir prices did once again not adjust to the market levels for the month of August. However, this is not unusual for this time of the year where processors are more impressed by the low numbers and their positive expectations for the after holiday period, rather than analysing market realities.  In € terms we have to consider buying levels at least 10% above will market reality.  This applies mainly to

dairy cows which are much more influenced by the currency fluctuations. The market for bulls starts to return to normality with the regular buyers returning to work. Interesting will be the question if inventories of bulls have been built in the vacation period which would need to find homes now. The kill: Still on holiday levels and in the next two weeks we still don’t expect any change. The proportion of females continues to be below previous years and expectations as well as the avg. weights. Towards the end of the month we should start to see some relief. What do we expect? One has to start now to wonder about the market progress towards the autumn. Due to decent leather business and the growth in China most are positive for the new season with tanners trying to play enthusiasm down and warning about raw material prices. Since we had been on the positive side for the first half of the year, we are starting to have growing concerns now for the coming months which are deriving from the financial side of the business. The next week will see pressure on cow prices in €.