What happened this week: Last weeks trend continued and as far as business was concerned cows moved further into the foreground. While many were or are still suspicious about the general demand for leather, it seems to us again more a matter of price – or as many others would call it ,when prices fall demand increases’. We found plenty of interest this week for cows – in particular from Asia – and a decent round of sales took place. Well, it is difficult to establish a satisfying price level, because a the moment the situation is entirely against the seller. The USD has been falling continuously as is not far anymore from the record lows and abattoir prices do not adjust in reflection of the market adjustment. However, if one is fair and not squeezed by general company economics, nothing else is happening than the readjustment of cow prices which had been pushed high in the first half of the year as a result of a firmer USD and a larger number of Chinese tanneries trying to enter the upholstery market, starting productions and using standard, medium quality

hides. In the meantime is the overcapacity and the price pressure for finished products forcing more tanners into cheaper raw materials or even to buy less, because the total market potential presently is not enough or profitable for all. Anyway, also in China the good and strong are separating themselves from the rest and they keep on tanning and need to purchase hides at adequate price levels. When one looks at the price levels under these conditions nothing abnormal is happening. We are just returning to the price levels seen a year ago and a trading range for cows between USD 45-50 is the absolute normality. No fun for € prices since the USD has devaluated a rough 15 % against a year ago and consequently are € prices still inflated. While many are over-concerned about the market situation we think, that still believe that global leather demand in total is intact under the condition of adequate price levels. Activity in bullhides was also reasonable. While European buyers were quite some interest came in from Asian customers which obviously try to protect themselves against

the steadfast US big packer market. Also here is to find a price a struggle. Not, because the price as such is wrong, they fit into the global structure, but the prices don’t fit into the abattoir price levels and every sale is an forward option, that eventually also abattoir prices will have to make their corrections to market realities. Sales summary of the week: Volume satisfying, prices not at all. The kill: In total quite good and normal. However, the numbers of incoming males is still very low, while the seasonal cow slaughter is on the high levels one can expect for the second half of October. Now, everybody’s guess is when finally the expect larger slaughter of bulls is going to start.   What do we expect? Next week the market will just wait for the results and impressions the fair in Bologna delivers. From the general trend we think, that the market is now starting to settle. It might need another week or two, but on the new levels we have a fair chance to rest a moment and price variations might derive more from the currency markets or other external effects. However, we cant see a reverse trend and the latent pressure will persist.