What happened this week: The market and the activity returned to normal gear now. The financial markets stabilized and also the market in the Orient displayed normal activity again. So, for the time being the price correction seems to have run its course. Not, that much has changed and the activity in Europe is still below average, but the present purchasing activity is strong enough to absorb most of the standard grades of the regular continental European slaughter. It seems the market will again be directed by the demand from the Orient and there is still very little question about the steady demand from the shoe industry. One must not forget, that in Europe only a smaller proportion of the hide supply is predominated for the shoe leather production. Whatsoever, the next market move is certainly again depending on the impressions the trade is going to gather from the trips to Asia which are scheduled for the coming weeks. Beside the question what the stock position of tanners might be quite more interesting is the activity of leather buyers who are traditionally also cruising in the region at this time of the year. Assuming leather business remains as strong as it has been or is even getting better than

before, than the fundamental problem remains still the same. While some think this is just the definition by price it cant be repeated frequently enough, that more money doesn’t buy or better produce more hides and eventually the industry has to find other solutions. Apart from that also a nice breakout of prices on the upside might also have a curing effect. One way or the other the balance of supply and demand has to be achieved eventually and for the near future the pipeline would require a buffer of material what it hasn’t got at the moment. So, at the end even with the little break we have seen nothing fundamental has changed and there is little evidence for any short term change so far. Leather demand and the outlook for the same is still good enough to keep things clear for the moment. The only question mark is still related to the specialities. As far as sales for the week are concerned one sells what is offered – as long it is not salted extra heavy bullhides. The majority of interest was for dairy cows, low grades and light weight bulls. Prices were entirely stable. Asking more fails and bidding down as well. The slightly better exchange rate vs. the USD has assisted to wipe out some

of the losses of the previous weeks. However, the price fluctuations are neglectable anyway. Consequently there was little to win and little to loose and so we all continue to wait for the next big move of the market. With the limited availability of material and the non-reaction of the market on ‘bad-news’ it seems, that the hopes of tanners for substantially lower prices in the short term should be limited and one has to wonder could be the story of the fair in Hongkong which would scare the market that much to move it seriously lower. For the opposite the fundamentals are easier, but any sharp increase of prices would also have severe consequences.  The kill: There was a short lived upturn which ran quickly out of steam. Packers claim, that there is enough interest for beef, but little chance to buy enough cattle at the right price. Sounds a bit like the hides market and if this is true ‘welcome to the club’ . What do we expect: We can still not imagine what could free the market from the present pattern it is framed in. The demand remains good enough and if tanners are really short bought they will have fun to secure their needs. However, with the slow performance of the upholstery market it will not help us much right now.