What happened this week: Last weeks report could have been easily copied into this weeks. The situation was almost identical with the only exception, that the revenues from USD sales eroded again, with the USD falling from Easter Monday back to levels above 1,10 against the €. Concerns about the US economy, SARS and the lower oil price kept the pressure on the US currency. Sales were also this week again entirely concentrated on dairy cows and almost exclusively on exports to Asia. All negative reports about the Asian market have to deal with males as we see a strong demand for cows now for the third consecutive week. It doesn’t help very much, because prices remained almost unchanged vs. last week and so had the weaker USD the full effect. Also L/Cs are coming in regularly and shipments are absolutely on schedule. Sales in Europe were almost non existent. Many italian tanners took a very long Easter break, what reflects clearly the insufficient order situation they have to deal with. Furniture leather demandis said to have declined enormously in

the past weeks and considering that we are entering now the low season the decline comes by far too early. One can only hope, that the emotions due to the SARS have had more impact than the reality. Otherwise it will be a ‘hot’ and long summer for the furniture tanners. If it will be the same for the shoe and leathergoods tanners we will probably know after the Bologna Show. If it will take place. There are constantly rumours around, stating it might be also cancelled due to the expected Asian visitors. We cant really believe this. The traditional round of European steer buying has been postponed due to tanners request. In South Germany the trade is again involved in the periodical negotiations of hide prices with the abattoirs and tanners are expecting further extended declines as the negotiations have to cover the adjustments for the last two months plus the expectations for the coming ones. In the North the next round of negotiations is also due in the coming two weeks. Interesting to mention is also the revival of interest for sheep and lambs, predominantly from Turkey. While during the Iraq conflict interest and business has come almost

to a standstill it seems, that now everyone is trying to make up for the time losses. So, all in all nothing has changed vs the previous weeks. Prices are remaining under pressure, business is quite good and hides are in consistent demand, but many tanneries are in a very bad mood and the structural changes are massively depressing the sentiment.  The kill: Very poor during the Easter weeks. Avg. weights continue to fall and it requires a lot of effort to keep the supplies to tanneries intact. Next week with a holiday on Thursday it will not be easier. We hope, that the cow kill is going to improve a bit due to seasonal influences. What do we expect?  With the pessimistic mood around the globe there is little chance, that the emotional trend can reverse  at present, inventories are low and at least in Europe many sellers are in a decent forward position as far as the main grades are concerned and the kill wont help either. This prevents the market from a further and steep fall. The market is driven by the leading markets (USA) and their retreat, however we repeat our opinion, that supply is tighter than many people like to believe….