The holiday season is slowly coming to an end and day by day more factories are returning for the second part of the production season of the year. Some companies in Southern Europe are still missing, but with the start of next week they should resume their production and activities. As is so often the case, it always takes some time for everyone to clear their desks, clear up the accumulated and accumulated work and then get back to the normal routine of business. This year it seems that most people are in no great hurry to get back to the business of the rawhide market. There is far too much focus on the problems of increased costs, water shortages, the almost daily deterioration in the consumer markets and the question of how the energy supply in Western Europe will continue over the winter. Of course, one has to deal with raw material procurement and the situation on the market, which does not give the impression that any European tanner is currently worried that he might miss out on something on the market and that some urgently needed raw material might not be available to him in the next few weeks. Even if people in the leather industry are not talking about it yet, the business press as a whole is already discussing the issue of dwindling liquidity due to reduced sales and sharply increased costs. It still affects few, because most still have valid old and valid energy supply contracts. Nevertheless, with each passing week and month, the issue is becoming more and more important. In some sectors, there is already open talk of declining payment morale due to the squeeze. On the business side, at least the activity in communication increased a bit. In short, there were more people wanting to get information and discuss the trend of the commodity market for the next weeks and months. It is noticeable that there is more and more activity from countries that may benefit from the Western sanctions against Russia and their rise in

energy costs. From Asia, and especially from China, the situation remained unchanged. Low-quality goods at very low prices are still attracting sufficient interest, but this is of little help because there is very little of it in our region. In addition, business from China remained very sporadic this week with a few customers focusing on selected types of  better qualities. The classic and traditional buyers of raw materials for the furniture industry were largely inactive, at least in our region. In Europe, the renewal of current programmes is now on the agenda in many cases in the next few weeks. It is not difficult to see that the views of most sellers, or rather the beef industry, are moving further away than ever from the expectations and ideas of the tanners. On the one hand, they are still trying to use the low slaughter rates as an argument to push through higher prices, and on the other hand, it is made clear that the increased costs and the generally very pessimistic expectations for the consumer goods business suggest quite the opposite. At this point in time, the two blocs are still very far apart and one gets more and more the impression that both sides are playing for time in order to be able to push through their own interests in the end. The sales volume was not particularly high this week either, because in combination with the still relatively low kill it does not yet lead to any major concerns and worries, except perhaps for those who already have larger stocks.

The kill

The kill was still low this week. However, you can already feel from day to day that the numbers are slowly starting to increase, which is completely in line with expectations and the normal seasonal development. Feed is already scarce and expensive in many areas and with the over 10% drop in production in the first eight months, there is no other conclusion that we can expect a significant increase in volumes at some point for the rest of the year. Timing unknown.

What do we expect

We do not believe that the big knot will break next week. The price ideas of sellers and buyers are simply too far apart for that and both sides have not yet reached the point where they can convince each other of their view of the market situation. This means that business will continue to be limited to individual, sporadic deals before final decisions have to be made in the weeks that follow, at least until the fair in Milan. Taking the whole environment into account, we stick to our assessment that caution will probably be the best advisor in the current situation. Obviously, little is missing to give the market a decisive push at some point.