What happened this week: The week was very similar to last week. Business was quiet due to the holidays and due to market uncertainties.

We are enjoying the stronger USD and the US market, which is said to be in good shape and which is making sales possible. We have seen interest this week from markets and clients we hadn't seen for a long time.

Most of them are regular buyers of US hides and it is pretty likely that they are coming back to alternatives because they find either the prices in the US too high or they cannot find the hides they are looking for.

Whatever the reason, it is offering us the chances to sell some hides during the European summer and this means hides which are not the classic articles, which sell in Asia, such as dairy cows or low grades.

The interest is specifically for alternatives to steers hides and we have to admit that we are quite pleased with these opportunities and have taken them with pleasure. However, the volume of this business is quite limited, as is the number of hides available for such business.

Other than this, the market remains in the same agony as it is has been for some time. No one is willing to take any larger commitments and, at least in Europe, the Ukraine conflict is worrying more and more businesses while in the US, most are pleased to see the economy getting better.

A taste of the increasing tensions in the Ukraine and the Middle East was seen when Adidas’ share price fell 15% in a day after warning investors over uncertainties in the Middle East and Eastern Europe. Other companies have begun to prepare their investors for the possibility that the sanctions will have a negative influence on their businesses, too.

So, while the holiday period is relaxed, political developments over the summer have the potential to be critical. So far it hasn’t touched the hide market and almost everyone is running in the same pattern as before.

Most are still considering the supply situation as the most important factor, pointing to the good performance of the auto industry and the regular business for the large shoe brands. Here we talk about fixed supply chains where big meets big. This used to define the market, but if one looks at the global numbers, it is now questionable whether it reflects the general leather market.

It is going to be interesting to see if the trend to bigger units with less flexibility will be sustained when the markets take a break in growth. For the moment, the industrialists have the upper hand with increasing regulation and investment requirements causing higher overheads, needing bigger productions to pay for them, as well as limitations such as supplier restrictions - which are made with good intentions but reducing the supply potential significantly.

The intention to gain more market control could work if the fundamental conditions do not change, but a change could convert the strong links into weak ones too - supply chain strategies do not count when the sales of some in the chain decline.

Sales this week were moderate. There was a bit of interest for dairy cows from Asia at steady or slightly higher levels. In Europe, patchy interest was seen for heavy bulls and some sales of bulls into Asia were possible.

The strengthening USD improved returns and calculations began to return to acceptable levels. The number of hides sold remains low but normal for the holiday season and it is now time to wonder if one should go to Asia with or without hides to sell. 

The kill: Northern Europe has been blessed with a very warm summer this year. This is keeping beef consumption low. From the cattle numbers we believe a rise in the slaughter in the last quarter will finish the year with steady numbers. However, the Ukraine crisis has the potential to change this. 

What we expect: We cannot think of anything that would move the market substantially. The only thing is possibly the widening range of prices for different products and origins and the political tensions. However, this will hardly bother anyone before the end of the holiday season and the All China Leather Exhibition in Shanghai (September 3 to 5). Eventually, a readjustment of the price structure will happen in whichever direction. For the coming weeks the prices will most likely continue to be driven by currency and isolated trades.

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