For much of Europe, a short week ended today. It is probably not an exaggeration to assume that a long Easter weekend is a pleasant event and this time perhaps even more so than ever, as the market situation is undoubtedly becoming rather more difficult from week to week. Even though there are still quite a number of market participants who take the small rays of sunshine as a reference for the overall market situation, the majority of players, however, have to deal with growing problems and worsening prospects on a daily basis. Almost on a daily basis, there is more and more debate about how much material and goods may have accumulated along the supply chain in the meantime. How much there may be, it will take a very pronounced combination of low slaughter and significantly increasing demand to dissipate the inventory that has now accumulated at every stage of production. From the point of view of consumption and planned production in the coming months, there is then not too much hope. 30 % top grade material can not entertain 100 % of production. At the same time, this means, of course only if our assumption is correct, that one has to deal very intensively with the challenges of the coming months. The fact that demand for better ranges and certain hide types will remain stable, both in recent weeks and in the coming weeks, does not solve any of the other problems that already exist and which may become even more acute in the coming months. This is quite simply true for volume production of leather for mass consumer goods. Everywhere there is talk of too large stocks, and this does not apply to hides alone at all stages of

processing, but then continues at the next levels up to retail. The warehouses are still too full. The optimists are still betting on the falling kill that is expected in both the USA and Europe for the next few months. It may be supportive regionally and for certain hides and vealskins here and there, but the fact remains that globally beef production is not falling. No particularly good news from the leather industry reaches us from China, and talks in Europe are also becoming much more difficult. The weak US dollar and obviously falling prices in the USA are also having a significant impact in Europe. Business this week was almost exclusively focused on renewing pending contracts in Europe. No easy task even if, at least for the heavy bulls, settlements were still possible along the lines of the previous month’s prices. For the other skin types, mainly cows, the pressure is increasing and here somewhat larger concessions had to be made. However, the prices that can currently be achieved in Europe are noticeably better than the level that is possibly valid in Asia at the moment. Even the lower transport costs are of little help to this destination at the moment. So, business is still dragging along without any extremely large price changes, but the rumours about significant stocks and the likelihood that not all hides will find their customers do not improve the basic situation. The biggest concern, which is probably on everyone’s mind, is that even lower prices would probably not trigger a significant and sufficient improvement in the situation. However, that would probably be the worst argument and the most dangerous description of the situation.

The kill

The kill is of course affected by the holidays this week and next. Productions are very different from place to place, but all in all relatively normal. After Easter comes the crucial phase of how production will continue, as many animals return to pasture and the season of larger male slaughters also comes to an end. The situation in the meat industry is also worrying and here, too, one must expect further adjustments in capacity before the end of the year.

What do we expect

Even though the official prices do not show it yet and even on the surface it still looks relatively stable, we remain not very optimistic. As long as suppliers wait and hope for improvement, the current situation will still be controlled and successfully defended. Possibly holding out until a real and fundamental improvement. Experience teaches that this usually does not happen. For the near future, we expect prices to continue to fall in a controlled manner, for most hide types.