What happened this week: At the end it was a quiet week. May be, that the impression was a bit more pronounced due to the holiday on Thursday in most parts of Germany, Austria and Switzerland. Although the main tanning centres in Europe such as Italy and Spain were open,  the activity also from those directions was limited. The only real life in the European market has shown was again for light material. So, we saw again plenty of inquiry for weights between 5-20 kg. It seems, that there are still a number of leather orders circulating in the market which require coverage of adequately priced raw materials. We are too far away from the leather market to really understand if the orders for finished leathers will continue to favour this particular light material, but if the demand is going to continue also into the second half of 2005 raw material supply is going – for this particular sector - to become a problem. The rest of the market was simply busy to administrate shipments and logistics. Sales where patchy and isolated and more a matter of coincidence rather than a clear sign of tanners needs. So, a few containers of dairy cows and ox/heifers were sold, but much less than in the weeks before. Prices were

just steady, but the firmer USD help again in the calculation. It is anyway still like the whole year, that the currency market is much more determining the market sentiment rather than the market itself. The situation as such has still not really changed. The market is still divided into those who see the positive signs with good shipments, low kill and  the firm USD while you have the others who bother mainly about the massive price pressure on finished leather, the weak demand for upholstery and garment leather and rising financial problems in the industry in general. It is a bad time to make final judgements, because we are running into the summers season in Europe and at least we still don’t have a clear picture about the situation in Asia. Following the logic of the supply chain and the timing of the same we should see now an increase of demand from the Asian upholstery tanners and the seasonal decline from the European ones. Consequently another period of a market in balance. The male market remains still well supported by the low kill and the next round of price negotiations in our part of the world will show us if the there is serious room for price increases in this preferred hide selection. While butchers

aggressively hope to convert the lower kill since February in clearly higher prices are tanners still focussing on depressed margins and falling finished leather prices. Not an ideal position to start with. The seasonal falling avg. weights are also working against the market at this time of the year. Worries about possible payment problems in Europe over the summer are also not making decisions for many easier. The kill: The holiday in the West and the South of the country has again cut the total kill by a lot. The North has been untouched and slaughter was even slightly higher than expected and definitely better than the last week. Anyway also for the next weeks there is no reason or indication, that the kill is going to be any better than the low and steady seasonal levels.   What do we expect? The coming week will also not bring much of a change. The business is Europe will fall again mostly into agony. In males we expect little trade until the renewal of contract is due. Excess supply is hardly available. The cow market seems to loose pressure. The higher USD, reduced stocks due to decent shipments, the low kill and the US hide prices are working as  stabilizing factors, but we still don’t believe that this is argument enough to propel prices to higher levels for the time being