What happened this week: As anticipated slowed activity down this week. This was probably not only just a result of decreasing interest, but also related to shortened offer lists. Stated already last week it seems, that most established sellers have done their job on dairy cows and were fixing programs with their key customers for the coming 6-8 weeks. Consequently not much left for the non regular customers. This situation paved the way for trader business and so was most activity this week seen from traders asking for offers – either to cover existing sales or to arm themselves for the still circulating latent interest from Asia . European activity was mainly focussed on light weight material and irritations in the abattoir buying. For the rest most people are in excited expectations how the present market conditions will influence the standard business for bullhides in Europe . Abattoirs have already made their decisions and it is going to be a tough task to make ends meet in the near future. The market starts to enter into a pretty difficult pattern now and the key question raised – at least for the business into the Far East – remains if all the raw material which has been bought in the first quarter is covered by finished

leather contracts. While one has to believe, that this is the case for everything related to the shoe and bag leather production remains at least a certain question mark as far the upholstery sector is concerned. In case it is just a temporary and delayed refill of what was missing in the period from November-January the wave will roll out seasonally after April. In case it is really additional and rising global demand we will run into the classical col-de-sac of the market. Rising prices do not generate automatically more hides nor higher leather prices and eventually the market will sort it out. It is still too early to come to a final judgement and it still requires a few more weeks to have a clearer picture, because we are presently in the period of transition. The USD lost this week almost 2 % of its value what kept revenues pretty much under control, because prices couldn’t advance to the same extend. Sales were moderate with less broad based interest and more patchy inquiries. This was still enough to move everything desired in cows and ox/heifers while the kill in males is just about to keep the basic demand satisfied and the shipments secured. Prices remain on full asking levels, but failed to

improve so far. Looking at the levels today of dairy cows we are certainly getting closer to the levels where the market always shows strong resistance and the climax of the market in the first half of the year for dairy cows is frequently around the end of the first quarter. After all the trips to Asia which are started at the moment we will all know more about what to expect.  The kill: Reasonably steady. Beef prices are favourable, but abattoirs struggle to get the animals at the right price and in sufficient volume. The effect of the bird flu is now definitely sensible even if the consumers reaction is as difficult to understand as it is frequently when it comes to similar issues. For the coming weeks we have no reason to believe, that things are going to change.  What do we expect? The short term outlook remains unchanged. However, for dairy cows it might be time to start think a little bit further down the road. Unless there is no confirmation for an increased order position vs. a year ago one has to assume, that the present demand is related strongly to the import tax policy in China where the impact could fade towards the end of the first half of 2006. In case there would not be any additional support (demand) a correction would not be a surprise.