Slowly but surely the market is now entering the holiday season. A few tanners are still checking around to see whether there are any suppliers of quality hides left who might have not realised recent market developments or who have been holding hides back that they might now be willing to sell. There were quite a few contacts from people who hadn’t been around for a while and who were trying to refresh sellers’ memories in the hope that there might be a few hides left waiting for them.

This did not seem to be overly successful. We understand from a few people that they are holding hides back until after the summer holidays and for their trips to Asia, which will start towards the end of August. With the general hype we are seeing in the markets at the moment and the optimistic view that the leather industry will see a great recovery later this year and into 2010, this strategy is understandable.

To us it still seems there is a lack of investment opportunities. Despite all the discussions about the credit crunch and a lack of finance, there are quite a lot of investors around who are sitting on huge amounts of cash with no reasonable options to invest in. Although hides are not really an investment vehicle they are part of the game.

This is even more pertinent because some industries, such as the automotive industry, had not realised that their risk management strategies during the crisis might have relied too heavily on their computer-based supply management systems and not enough on a fair analysis of the resources they needed and the situation in the markets. All this has composed the explosive mixture we have to deal with today.

There is no question that the raw material that had been pushed back into the pipeline has been back on the move. However, this has not fully reached the medium/lower end of the quality range as yet having been almost entirely focused on the medium/higher end. This leaves us with the question of how far prices at the higher end have to climb before we see the reality of the situation.

If leather demand is really strong enough to force tanners into further buying they will have to divert into the lower end of the market as finished leather prices are not yet moving quickly enough to pay for the steep rise in raw material prices. Alternatively, demand will dry up with producers lacking the courage to continue to invest further in raw material. Later in the autumn when the real leather orders have been placed and the main trade shows are held we will know.

In the meantime, last week saw a limited amount of trading. This is mainly because offers were rare and key buyers were no longer pushing hard for offers. It seems buyers and sellers are happy to take a break with one convinced they will get the same or even higher money in September and the other believing it might be better to wait rather than to push a market that is either not willing to, or not in a position to, satisfy requests. Trading was light with a few cows changing hands at asking levels and some sales in sidelines.

The kill: The kill remained low as we expected at this time of the year. Abattoirs are running their minimum levels and this will continue for the next six to eight weeks. Weights are pretty low this year and low prices for milk could force more dairy cows in the mix after the holidays.

What we expect: Next week the trade will be in summer mode and sales are likely to be rather coincidental. Most players have decided to wait and see, so the major focus will remain on the battlefield at the abattoir doors. The market hasn’t sorted itself out yet after the steep rise. In the summer season anything can happen, but it is normally time for a break.

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