What happened this week: With the two weeks of the Season holiday being over we returned to full normality. And this did not only mean normalizing slaughter and general company activities, it meant also, that tanners around the globe had to bother again about their raw material supply. While the week was still starting reasonably relaxed the pace accelerated mid week and climaxed late Thursday and Friday with a large round of bids from overseas destinations. Most likely this was triggered by the release of the US export figures and the general market reports circulating not showing any concern and quite reverse being rather optimistic about the price trend of the near future. With the shipping times also being quite extended it seemed, that the Asian buyers were considering the European market again as a potential alternative. With the price levels we have reached negotiations are not easy and tanners still try throw their nets below asking prices hoping to find the weak fish in it. However, with the limited availability of material their were seemingly not very successful and at the end the currency market was again giving the helping hand to turn the bids with a lot of effort into some kind of acceptable prices.

The key problem with many bids coming in is the extended terms a number of tanners also is Asia is still looking for. Higher financing cost and the cost of hedging the currency have become quite expensive over the last year and on the present price level some percent inflate the price by dollars what buyers find (obviously) pretty difficult to understand. At the end, however the week finished with a pretty high sales levels with prices being at least steady or in some cases even slightly advanced. While the focus in the last weeks was almost entirely on males and heifers had dairy cows this week quite a strong comeback. With the forward position there was not much to worry yet, but cow sales hadn’t performed well since mid December. With this weeks round of selling, however any concerns have been wiped away for the coming weeks. If there is any cloud in the market sky than it is the coming from than only for those grades which had outperformed already last year. The extra heavy and top quality material which is finding real market resistance still and the outcome of this battle seems still to be open. Sellers having less alternatives in the global market might have it bit more complicated.  In Europe discussion are becoming increasingly

difficult. Tanners feel more and more lost in this market as they have to realize, that for the moment their influence on raw material prices has faded. In this mood discussions have become sometime rough and cynical without changing anything and certain ‘trial and error’ activities by tanners to influence the market in their favour even add to the problems. The kill: The kill has normalized to seasonal levels. The last cattle count has delivered a decline of abt. 2.5 % for 2006 and this should be the way also for 2007. Due to higher milk production per capita the number of dairy cows declined more than males. The next weeks will not bring much changes and if any not on the upside. Carnival season is approaching as well. What do we expect: If there was still any doubt about the market situation for the time frame of the next 6-8 weeks they were wiped away this week. There was enough activity for the standard items to secure the market within that time frame. The question is if EURO prices can really  benefit. With a firmer USD there might be a bit of room overseas, but in Europe prices will continue to face stiff resistance. With all hurrahs, but it cant be expected, that a sharp increase of prices will be rewarded yet.