What happened this week: The trade is switching more and more into holiday mood. While in Europe people are mostly busy winding the activities down have Asian tanners been a bit more active this week. The number of sales, however remained pretty limited, because bids were below asking levels and the steep fall of the USD during the week made a lot of offers also obsolete during the week. Buyers were certainly not willing to compensate for the currency market and consequently a number of bids and requests were not completed during the week. In any case one could see, that there is the expected need to buy situation in China and upholstery tanners eventually have to replenish their stocks for the time after their New Year festival. They are obviously not in a rush knowing, that their main suppliers are going to take a break as well as their competitors for raw materials. Like in the previous years many of them consider this as a improved position for purchasing negotiations with their suppliers. So, it was pretty obvious, that many interested buyers from the Far East are still in the research and analysis state and don’t feel any pressure to take immediate decision when

their price ideas were not met.  In addition are the purchasing terms further deteriorating. Extended L/C terms and other requests which are burdening the price calculations. So, at the end it is quite difficult to make ends meet at the moment. On the positive side of the coin we have to consider, that there is interest and need to buy and presently the gap is not that wide, that it could or will not be closed over the weeks to come. The market still remains tightly trapped in the trading ranges we have seen for almost all 2005 and the real influencing issues on the revenues from overseas sales are more the terms and the currency rates rather than the hide market as such. The balance of supply and demand for dairy cows remains quite intact. The rest of the market remained reasonably quiet. In Europe some of the December program sales still need to be finalized. Abattoir prices are not of much assistance by staying more or less unchanged, what leaves little room for any declines which are so much expected by the tanners. Interest for light weight heifers and other side leather related raw materials remains good and sales can be concluded without too much trouble  and fights.

The endless conversations and discussions about the Chinese Import regulations remain confusing and the interpretation of the news circulating remain conflicting. The only thing we can add to this remains the fact, that Chinese tanners and buyers remain pretty much unimpressed by the issue and it is more the trade and raw material suppliers bothering about the subject. The kill: The decline continues and we are impressed by the sharply reduced average weights in particular for dairy cows. This is pretty unusual for the season and we fail to find any real explanation for this trend at the moment. Next week will be the final one before the Xmas week and the kill should then fall further towards the end of the week and stay on lower levels also in the week to come. However the total for December should be good due to the reduced numbers of holidays this year.  What do we expect? The market continues to paralyse itself. Positive and negative developments compensate each other and still no real new direction is established and there is no reason why this should change over the last two trading weeks in 2005. Tanners will continue to combat for lower prices while sellers feel cushioned by low inventories and an expected reduced slaughter.