What happened this week: Last week was as slow as expected as far as trading and activity were concerned. Some uncovered production needs were still around, but this was mostly in Europe and mainly related to heavy bull hides. Tanners are not happy about buying and would like to dampen the price trend, but if you need the hides to cover orders you have little choice.

Activity in Asia did not completely drop off. As usual, some Asian buyers were still around and a number of people thought that the holiday period would be a perfect time for bargain hunting. So they were not shy about bidding aggressively below asking levels, also hoping that the firmer US$ would tease one or another of the suppliers to consider lower bids. We don’t know how successful this was, but we are still hearing about the very ambitious positions taken by many vendors, particularly when it comes to butchers who are marketing their own hides.

This gives us the impression that the supply side has not taken any notice of the tiring momentum the market is already showing in many places. However, there is still little room for correction because, without accumulation of stocks, sellers will not see much reason to adjust the prices downwards.

The currency market is still playing an important role in the valuation of European hides. The 10% decline of the euro against the US$ has to be taken off the value of hides today because it is purely currency related. But even taking this into consideration, EU hides are no longer really competitive versus their main counterparts on the international market; the US hides. There is a fair balance between the two at the moment and at this stage the question is who will make the first move and in which direction.

Last week cannot be considered as representative of the market situation. If the Chinese market is not totally present the market is missing its main factor. So other destinations were able to play themselves into the foreground and one was able to see how many of the 'B' markets were also strolling around in the search of good hides at the 'right price'. It seems there are still many tanners who spoiled their clients last year with good-quality leathers produced from hides they normally can’t afford and now the quality hides needed are no longer available from their normal origins because their traditional buyers have recaptured them. They are gone and can’t be obtained anymore. 

So now tanners are spreading out and trying to find adequate alternatives. This is spilling demand into many markets and possibly presents a better picture than the market deserves at the moment. Prices during the week were mostly unchanged and all the variations we saw for the limited volume sold were rather negligible.

The kill: The kill remains on the low side. The carnival season in several parts of the country has left its footprints on production and numbers were down. We are still missing males in the slaughter mix and hide weights are low for this time of year. The slaughter should recover a bit this week. 

What we expect: Only strong activity from relaxed Chinese tanners with full confidence in demand and leather prices will move markets in the coming week. It is more likely we will see another week of sensible observations between buyers and sellers, who are all waiting for the other to move first.

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