What happened this week: Our expectations were not completely accurate, but the general trend was exact. Demand and sales for ox/h, kips and calf between 12-30 kg continued to be strong and despite the massive price pressure everyone is talking about and which could also be seen in other markets we were able to maintain asking levels and the sales at the end were on unchanged price levels or only fractionally lower. Total sales numbers were again in contrast to the market tone and psychology and reached once more levels well above expectations. Dairy cows, where we had been moderately bearish lost more ground in the market prices than expected, but in our view more due to fear and horror stories. This is what this business is sometimes mentally so well prepared for. Reports from Asia during the week were talking about massive problems regarding shipments and inspection of leather, but always when one was trying to verify the subject the problems – so far – evaporated. The fact of the matter remains, that also dairy cows sold

again widespread this week, with the regrettable situation that price were 5-7 % lower than expected and necessary. However, you cant empty the Atlantic with a bucket and so it was a decision of political strategy to follow the regular clients and to sell them some hides to average down previous purchases. So, the market continues in part to move further down in the deflationary spiral without having a fundamental reason rather than pessimism for the future and the repetitive argument, that finished products need price reductions to stimulate sales. This can also easily be seen by the strong and persistent demand for low and cheap grades. Since price is the only target at present, the quality sacrifice is accepted seemingly also by the finished leather or product buyers. A trend which can in the meantime be seen  in all market segments and the high quality/high price  segment has become msall and exclusive again. The week was also overshadowed by the news of voluntary or forced closedowns of tanners in Germany and Italy. Let’s hope, that this is not the tip of the iceberg. One has to admit, that it smells like we

could be now be at the start of  the restructural process in Europe we have been expecting for a long time already. Abattoir buying which finished only this week for April brought again insufficient declines (2-4 %) vs. the erosion we have seen in the past weeks. Since the March level was already too high the reduction were again not enough. The kill: slaughter numbers fell suddenly and sharp at the beginning of the week. Various slaughterhouses decided to remain closed for a day or two in some parts of the country. Despite numbers normalized towards the end of the week we remain pessimistic for the kill in the next week where the killing days are anyway shortened by the Easter holidays on Friday and Monday. Avg. numbers will be certainly down by 10-20 % in the coming weeks. What do we expect?  Tanners will continue to maintain the pressure on the market and will try everything to push prices lower. Although we will be influenced by the US market we believe, despite all pessimism, that the bottom isn’t far away. Deflation will keep prices under control, but supply will prevent from any further and massive declines. Only high priced items may fall further.