What happened this week: This week was again a ‘non event’. We have entered the traditional ‘after Hongkong spring cycle’ and market activity slowed down significantly. With the holiday on Thursday in most countries and the vacation in China most of the market participants were either on holidays on in holiday mood. This left very limited business activity and sales for the last days. Most of the weekly focus was on the currency market with the USD continuing its correction. The currency has now gained almost 4 % versus the record low seen last Tuesday during the Bologna show, but at the end it did not help much as there was very little interest from overseas no matter at what price. Anyway, if the present direction is not just another trap as we have seen many over the past year and we might enter into a new trend with the EURO declining and the USD gaining it would at least be a bit of a help for the problems of prices in the EURO zone. Before this can have any effect, it would however need more interest and demand from the overseas markets and this seems not to be the case in the immediate future. The holiday break will at least for the next week or two keep the market activity

on the low side. Same applies also for L/Cs and shipments which are also effected. Many of the concerns we had, that the environmental policy in relation to the Olympic games in China could have a negative impact on the tanning activity seem to become true. This adds to the sharply rising production costs and the problem of the slow down of the global economy and seems to cause small and medium size tanneries significant problems to maintain their production levels. Although activity should pick up a bit after the holiday break a lot points into the direction of a slow down until at least after the summer. The bigger companies are far less touched. The global demand for consumer goods remains still normal even if the growth may slow down a bit. Producers may relocate productions for cost reasons and this may cause short term interruptions, but the total level of demand will not be altered by much. Sales for the week were again rather coincidental. Some follow up from last weeks show in Bologna was noticed and some sales of low grade and light weight calf and kips were effected. The lower kill and lighter weights have lifted slowly the pressure on the standard grades for the European industry and the regular programs

are enough to clear the current production of hides. What was missing was the extra business from the export markets in Europe and the Orient and if there is anything good at the moment than it is the rising USD what is at least offering a bit of relief on calculations – if there is going to be more interest from the export side in the weeks to come. Prices were about to be steady, but with the small volume of sales this weeks sales cant actually be called representative for a real market level. The kill:  The kill continues the seasonal decline. With the holiday on Thursday and the next one to follow on Monday in a week supply is not going to be a burden. Weights are also rapidly falling now, what is going to continue for a while and we now enter the low season until fall. News reports about a sharp fall of food consumption in the country due the rising prices may also effect slaughter in the short term. What do we expect: From next week we expect very little. A rebound of interest should need at least another week and if the USD can extend its gains there might be better opportunities again. A bit of the competitiveness lost over the last weeks has been regained now, subject the other overseas markets remain steady in prices.