What happened this week: The market is now watching with great care the development in the US hide market. The situation out there looks pretty vulnerable with Asian tanners now seeing their long awaited chance to drive the market further down and to return to acceptable margins and sellers finding it difficult to accept why they should lower their prices being still convinced that leather business is good and hide demand should be strong. For the EU market the situation did not change much (yet). With the kill in a reverse trend than in the USA and most sellers pretty well sold the need to move is pretty low at the moment. Tanners are throwing the arguments of the weaker US market into the ring, but with not too much success so far. Only the extra heavy hides have undergone the correction while most others are still holding pretty well and only minor price adjustments were needed. The stronger USD during the week made it even possible to make minor price concessions in the overseas markets without hurting EURO returns too much. Interest was mostly focussed on dairy cows and low grades again and prices were almost completely steady. Ox/heifers and bulls have a more difficult time to find price agreements with the

headwinds they are facing from the US steers market which is not anymore sheltering the European prices levels. However, with the reduced availability and kill the limited interest is still enough to clear productions within very small price variations. Interesting is the fact, that  a bit of the pressure on the extra heavy continental hide market seems to be lifted and the traditional seasonal fall in supply is assisting in achieving the market balance – at least on fresh material. We don’t believe, that this going to affect prices in the short term, but it is going to ease some of the stress of the sellers and with the market correction seen recently the price structure between the weights and grades seems to be more adequate now and prices for heavy material should now start to swing with the general market trend. Some difficulties are still heard from the vealskin market. It seem, that there are still a few unsold lots around mainly in the heavier section. With the low season and prices still at pretty high levels it could well be, that they will continue to find difficulties to be placed and as closer the summer holiday season gets as more difficult it is going to be. So, even though our markets seems to be in a reasonable balance

Europe is not the trend setter and most of the global markets are still searching for a safe bottom. Under normal circumstances this should still need a few weeks and tanners seem to be in the position to let the market slide moderately to replenish their inventories with more comfortable margins  early summer. Until then the support for our market can only derive from the currency situation and until then the market should remain in the typical spring agony.  The kill: At this time of the year not much can be expected. The long expected rain lets the grass grow and the holidays spread over the month are keeping the kill on the very low side as well. Weight continue their seasonal descend and this will remain the pattern of the market until sometime in August. What do we expect: The supply is keeping the market under control. From the demand side we fail to expect much support for the market. If the international markets continue to weaken the support for our market can only derive from the currency market and another USD rally. With not much accumulation of hides around a weak/steady market trend for the coming weeks seems to be the most realistic assumption. Still little to be seen for a major and larger market move.