What happened this week: The march of the Oriental convoy continues, but the headwind creates tough resistance and walking is getting increasingly harder….this might be the message of the week. Our concerns, that the interest from Asia could be temporarily interrupted did not materialize and bids and interest continued also this week. With a stable USD and slightly improved bids some business – in particular for dairy cows – was concluded. However, looking at the fundamental firmness of the market it is still extremely difficult to convert this into higher prices. We have made progress since beginning of the year, but the extend is small considering how active sales and shipment were. This confirms, that market players are not yet fully convinced, that the market average will eventually settle in 2006 on higher levels than in 2005. This is not only the wishful thinking position of the buyers, but also sellers have so far preferred to keep the ball rolling and keep the production flow rather than betting on a bullmarket with much higher price levels. This kept prices under control with little variations. A bit worrying is now the fact, that the security stocks and inventories are quickly melting away and the shipping requests are still far above average and if

nothing happens also March is going to be a very busy time for the shipping departments. Most of this is certainly related to the delayed purchasing decisions from many which were betting on a market effect related to the import tax policy in China . Well, it did not have any effect and so had many to rush to cover their needs with a 46- weeks delay, but for prompt shipments. The hides which were not departing to Asia at the mend of 2005 found however ready market and shipments into other markets, so that now pressure on the market was built. In the meantime also leather business has proved to be better than projected and… see above. For the moment it seems, that no negative news are influencing the markets anymore. The anti-dumping import tax which are most likely to be imposed by the EU against China and Vietnam   have not created any negative sentiment neither is the bird flu or anything else stepping into the foreground. In the attempt to keep prices under control are Asian tanners now circulating the entire trade trying to find still suppliers ready to accept aggressive bids and the extend of traders interest was impressive this week. One can only hope, that these are not short sales,

which need coverage. They would grab into an empty box at least with the regular supplies. Sales during the week were again dominated by dairy cows. Although the heavy ones are still dominating find now also lighter weights their home into the market and cows are increasingly used in shoe and bag leather productions. Bulls are benefiting from the low kill and so are inventories used to compensate for missing slaughter numbers.   The kill: Still no changes. Abattoirs admit, that the demand for beef is good, but they don’t find enough cattle at the right prices to meet the market demand. Sound familiar from other markets too. The kill should stay on the low side of steady due to carnival and has a chance to get a bit better after that, what would be needed and appreciated. What do we expect? The market will remain steady if not firmer over the weeks to come for the simple reason, that there is not much to sell anymore for the month of March. The only questions to be answered will be a) will sellers increase asking prices and b) will buyers follow them, because they still have to cover production gaps. Everything indicates at the moment, that the market will present itself with a firm tone for some time, but with decreasing trading activity towards the APLF end of March