What happened this week: The main focus of the business this week was less on the purchase and sales of hides but rather on the currency market and here in particular on the value of the USD. During the European and US trading hours the USD basically lost a cent per day. Not only, that this is weighing heavily on hide prices, but eventually also on leather prices and the entire competitiveness of the industry in Europe. In case the speculative bubble is not adjusting soon it will create a dangerous base for the European (leather) industry in 2005. The trading of the week at least showed a bit more activity than the previous ones. As we expected was there much more interest from Asia, but calculations in the morning were obsolete in afternoon when the USD had finished its daily descent. This applied mainly for the bids for cows which came in as expected in higher numbers, but were almost unworkable in view of the currency situation and so very little business was concluded to this direction. However, it is good to know, that interest in Asia has not completely disappeared. News from that part of the world are anyway more than mixed. While some tanners open their L/Cs still completely

regular and even quick are rumours around about some of the largest upholstery tanners, that business is very bad with them, they delay L/Cs, cancel contracts and lay off workers due to the insufficient production. How far the rumours are exaggerated or meet the reality has still to be seen. In any case it is clear, that the automotive business in China does not meet the budgets and also furniture leathers are in some cases  well behind schedule. We hear, that quite a few of European suppliers are travelling in or to China at the moment and one can assume, that this is at present not because things are so brilliant out there. In Europe business was again a bit better and even further and isolated sales for dairy cows into Italy were possible. Hides for vegetable and side leathers were in reasonable demand, although the weak USD is also here a factor of calculation the influence is less direct and sales were concluded in acceptable volume for bulls and heifers again. Some order books must be still well filled and one could say, that business is not brilliant, but much better than overseas and  helping to move at least half of the production at normal speed. Also light

weight material found again decent demand and it seems, that the next three months we will have a good clearance of all the sidelines which had been so extremely difficult for the past two years. Price developments reflected the two sided market. The weak USD is burdening export revenues as prices in USD remained steady, while European sales run their  normal course between steady and moderate downside corrections.  The kill: Absolute normality. The cow kill is still running its seasonal course and slaughter levels remain high. Under normal conditions this should start to fade in the next weeks. However, we understand that beef business is still quite good, weather is cold, so the basis is laid for good slaughter also in the next weeks. What do we expect? The driving factor for prices is the currency market. Although we know, that it is not a popular opinion at the moment we believe we have gone through the worst now. Under the condition the USD is not taking another substantial dive we believe, that the market enters now a period of consolidation with prices not changing very much anymore. However, as long as the USD does not recover, there is also little hope for higher prices .