What happened this week: As one could expect we saw one of the weeks with the lowest activity so far this year. Peak holiday season in Europe plus some vacation also in Asia has left only scattered activity. Some sales were generated, but this was either regular and programmed renewal of existing long term arrangements or again isolated trades for light material. Some interest for dairy cows was also noticed from Asia, but in view of the weak tone in the US cow market and the falling USD it was difficult or better said impossible to find an agreement between prices bid and prices needed. Fortunately we are reasonably well sold and in the position to hope for an improvement later in the summer. Anyway, we have always kept the opinion, that our market was either sheltered by the high level of the US market or supported by the rising value of the USD. Both factors are fading at the moment and considering, that Asian buyers are mainly not getting into weaker markets but are much easier to handle in firm markets the situation for females hasn’t been too much in sellers favour at present. Well, we are right in the middle of the summer and many are still

convinced, that there is still a larger need to buy position in Asia plus some uncovered positions for dairy cows in Italy. For North German cows we are still more cautious. The market remains trapped in a price ranges of not more than USD 2,00 per pcs. for almost a year now and even when US hides were many dollars higher there was hardly any room for advances in Europe. So, it has to be again stated, that any price movements had been just related to currency fluctuations and buyers had an easy time to substitute their preferred origins with substitutes if their price targets were not met. Namely this happened between European and US cowhides. The only question is now if the long term price band is also the bottom floor for the next months. There is pretty good reason to believe so and we have to watch more the currency market than anything else. For males (bulls) the changes in the continental European processing and marketing structure are playing a more important role than the simple rules between supply and demand. With the retreat of established operations and the attempt of new the market balance is massively disturbed. Increasing competition between processors on

one side and the attempt of packers, mainly in the South to gain final control of the heavy bullhide market are leaving their traps in the market and prices are increasing. While presently tanners hadn’t been well prepared to combat the situation it is going to be interesting to see how their defence strategy  will look like in the fourth quarter. They will need good ideas and might be assisted only by the higher slaughter numbers later this year. Excessive fresh hide supplies will have the same sensible effects as the fictional shortage had at present.  The kill: The kill starts to recover. Earlier than we thought and focussed more on the North where the end of the holidays in already insight. Cattle statistics released show only a decline of abt. 1 % for the year 2005. There is a significant retreat in bulls of more than 10 %, but the total decline is less than what we expected. What do we expect? Also next week will still be quiet, although slowly tanners start to return form their holidays and from the week after we will have again more people to speak to. Our main focus will be on the currency market and the activity from Asia to understand what kind of price levels in € we will have to expect for the rest of the summer until September.