What happened this week: This week was less exciting in terms of the hide market and more so regarding the government shutdown in the US and the dispute about the budget. Although nobody really expected the US to fail, the situation has had quite an impact on the global economy. Those who thought the last-minute agreement between the political parties in US would stabilise the dollar were wrong, because nothing has really been solved. However, for the markets it was the guarantee that easy and cheap money will continue, which is good news for the commodity markets.

In the hide market this week we returned the same game played over the summer with suppliers trying to push the market higher, which is pleasing those tanners who had the courage to buy the 'special offers' in summer, but concerning those who need to replenish inventories. Many tanners who bought cheaper hides around the Shanghai fair [ACLE, at the beginning of September] were waiting to open their letter of credits until they could see the leather orders coming in. They got the confirmation and so shipments are beginning to improve and credits and payments are better than they have been for quite a while. This is giving relief to many suppliers and making them ambitious again.

Numerous people are predicting that hide prices will rise and even exceed the record levels we saw earlier this year. We are still missing the fundamentals for such a trend, but who knows these days! The fact remains that many tanneries are not operating profitably and financing their operations is becoming a bigger challenge every day.

The big players will certainly have enough financial resources to handle the situation, but the global tanning industry consists of more than just the big ones.

For sellers, firmer markets are easier markets and consequently very few were unhappy that the concerns of the summer have faded or even disappeared. Having said that, there is still a bit of a difference between the European and US market.

For many hide types, European hides had been too expensive for so long that we are just enjoying the return to the sights of tanners in Asia. Unfortunately, the financial markets were not as impressed by the last-minute agreement in the US, the USD took a nosedive and took some of the positive effects away again.

Anyway, although it was not a great week of sales some of the 'ugly' items in the warehouses found interest and those who were not betting on further price rises had a fair chance to get something moved in the lighterweight male section without too much damage. Trying to get the equivalent prices in relation to the US price lists which are circulating was in vain.

Dairy cows were not seeing the same benefits and buyers were not willing to pay. To get a fraction more took days and was only possible for very limited volumes.

Most of the sales this week were generated in Europe and the strong performers remain the heavy bullhides and the top-quality end of cows or heifers. It was a good but not exceptional week for sales and with the drop in the USD, revenues were practically unchanged.

Prices are still not sufficient to cover the present levels at the abattoir doors and with the current trend of the USD there is little hope for any better. 

The kill: We are approaching the high season and the numbers are slowly rising. Many animals are still in the fields, but we think it will not take long until we see some weeks of high numbers. Weights are on the rise, fitting with market demand. Everything is progressing according to normal cycles.

What we expect: The US suppliers have turned extremely positive again with the weaker USD, not in terms of revenues but in sales and demand. Big players have bought cheap hides in the summer and do not need many more. Finance and margins remain extremely tight, leather prices are not advancing the way they should and the global economy is not as solid as many say. Rising food prices are absorbing purchasing power and prices in the commodity items are important. This doesn't leave too much room for higher leather prices. The market is in the hands of gamblers and this leaves all options open until the game is over.

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