What happened this week: General activity slowed a bit down. Nothing really worth to mention, because the number of available hides is anyway small and the market remains in a situation where less activity might be better than too much more enthusiasm. Consequently were the number of sales limited and almost entirely focussed on the regular programs in Europe. In Asia most players were preparing for the vacation next week and were just busy to handle the necessary administration prior to their shut downs. Interesting is the fact, that nobody is anymore really rushing for shipments and a number of L/Cs which had already been advised for this week were happily shifted for opening after the holidays in 10 days. This might be just a pause and even the slow down in activity has not yet created any inventory in the pipeline which could create nervous sellers, but the reduction of interest and speed in Asia remains noticeable and intact. The absorption of the available stocks over the last 18 months has been too intense, that a moderate slowdown can already change anything fundamental in a few weeks. While the present focus cant be too much on sales the interest in our market has again shifted

back to production and purchasing. With the warm September the lower than planned and projected slaughter and the resumption of full tanning activity in Europe the balance of supply and demand hasn’t been intact for the past weeks. This wasn’t really expected as most of the trade had projected normal seasonal slaughter and at least in the North the kill increased also normally after the end of the school holidays end of August. However, this did not spill over into the rest of the country and also in our areas fell the production as the weather improved. This created a supply gap over the past weeks again with the normal market reflex. Players are having the usual and different opinions, but  one thing nobody can change. Paying more money doesn’t create more hides. In any case butchers are not much impressed by any long term arguments and squeeze whatever they can out of the present market conditions. This is hanging like cold fog over the market and makes one or the other shivering and the higher pulled the regulator is pulled, the higher the risk level increases. After the long period of reasonable stability have prices finally reached a new plateau and knowing the history it will now try to test the

limits.  While in the first half of 2006 most seller were quite happy to keep their warehouse empty and a certain prudence and discipline was ruling the decisions, is now the increasing confidence of many, that nothing ever can happen to this market taking more and more over and this is normal walking hand in hand with greed. Under the present conditions it will take a while until this can be sorted out. Sales during the week were mainly to the regular customer base and at asking levels.   The kill: Also this week weather was fine and the kill quite low. The end of the week a bit more cattle was slaughtered and with rain now in the forecasts we might see a bit of an improvement in number over the next weeks, except next week with a national holiday on Tuesday. Weights are also still remaining below the seasonal averages. What do we expect: The next week should be more quiet. Our holiday on Tuesday and the holidays in Asia should give the market a temporary break as far as activity is concerned. This will not change anything and we have to expect a continuation of the high tensions and firm undertone until a real change in the fundamental balance of supply and demand is triggered by whatsoever…….