What happened this week: A bit of a change during this week. While for almost a month all business was dominated or run by overseas customers and their European counterparts were almost idle, this week became almost the opposite. Asia stepped back and – like many others report as well – took a break after the sharp and continuous advances seen for many weeks. So, interest was seen but sales were sporadic at the levels we have reached. As usual when dairy cows move well above the USD 50 mark things turn to be more difficult. However, interest was still available, but the immediate need to buy has obviously faded with all the purchases made before the Chinese New Year, but nobody would be too optimistic considering that there is still decent interest  in the market at about USD 1,00/2,00 below the present levels. Now, we just have to see who is the first one to bite, seller or buyer. We find presently no delays in shipments and L/C’s what is basically the sign, that what is bought is

also needed and buyers have not just built a speculative position. Sales in Europe were generally inflated by the renewal of the long term contracts. A very, very difficult operation this time. Tanners had digged their heels in at much lower levels than the market finally permitted and so the levels of compromise were extremely difficult to be found. At the end steers prices came down by 2-3 % depending on weight and origin, what makes nobody really happy. Sellers not, because their margins remain insufficient and buyers not, because they pretend to need larger declines to make their calculations work. We find it very interesting, that after a period of years now, the premium for specific grades automotive tanners were able and willing to pay to secure their supply is slowly but surely fading and the gap between their prices and the competing tanneries, such as shoe, leathergoods and vegetable leathers is closing constantly. If this trends continues, this will certainly increase sellers opportunities and will eventually change trading patters again. Demand for low grades and cheaper

origins was substantially reduced this week and despite the constant price pressure many tanneries admit, that quality has also become an issue again. Apart from the daily trade in hides and skins we find the restrictive policy of European credit insurers more and more worrying as this limits the customer base and is also reducing the competitiveness of the industry in Europe. The kill: The kill remain stable on the lower levels. Male live cattle is quite expensive and not so easy to be found. For the coming weeks, this should continue to be the situation and by end March – depending on the weather – at least the cow kill should slowly improve again. What do we expect? After steer prices have now found their new levels we believe, that these levels will be valid for a while. With the weaker USD and the reduced interest from the Orient we expect dairy cows to be on the weak side of steady. However, any adjustments in the next week(s) will be minor and price variations will again not exceed the normal trading ranges seen for some time. Reasons for a major change of prices  and the actual level we fail to justify for the near future.