What happened this week: The market remains in the narrow frame of prices we have now established for some time. Underlying one can sense, however, that the tensions are rising. European market players are separated in the situations they are presented from Europe and what they hear from the rest of the world. The general situation in the leather business in Europe is deteriorating by the day. Again it has to be stressed, that this does not apply to a few successful companies which probably doing better than ever before, enjoying the low price level of the raw material in combination with a filled order book. For the majority however, it seems that they are suffering increasingly  from insufficient orders. In most segments of the business this has now created the classical ‘war of finished leather prices’ to grab whatever sale is possible. In our opinion we are now right in the middle of the consequences of the structural changes in the trade. It is frightening to see how many again ignored the ‘writing on the wall’ which was discussed already long time ago and today many which closed their business voluntarily seem to be the smart

ones. As far business is concerned it was another reasonable quiet week. The regular European customers are still waiting for the final offers of the year and most of the deals are scheduled for next week. From Asia isolated bids were seen again for dairy cows and low grades. To get the sales concluded it needed some negotiation, because the USD fell even further, but at the end deals were locked in with the assistance of the steady to firmer US market.  In addition more and more interest is seen also for ox/h and bulls from Asia. The price gap against the US material is too tempting at the moment. In typical Asian style now the ton loads of questions arriving to obtain as much information, assistance and warranty about the product before buying. Provided the US market does not turn South shortly, Asians will not resist the bargains much longer – despite all their prejudices about technical issues and volume availabilities. Economics will win – as usual. When this finally has happened another round of the changes of the old market rules will take place. Prices for the week were reasonably stable. Dairy cows obtained for the limited volumes steady levels, while on bulls very little was concluded so far, but it seems that fractional declines will have to be

taken  from the regular buyers to maintain the logic of the repetitive sales and following market trends. How difficult the European business was in 2003 can also be recognized by the declining payment morals in Europe.  The kill: The kill continues to be very sufficient and it seems, that the kill season has shifted to a later scale. We start later, than in the past and finish the season, which ended traditionally by the second half of November, now prior to Xmas. Unfortunately it is very difficult now to get a clear picture about the slaughter pattern after Xmas and butchers are not very helpful, but anything else than a significant decline would be a surprise.. What do we expect?: Despite the relatively quiet market activity, we are feeling more positive now. This, however just by the development in Asia. One can sense an underlying interest for hides. Many times said, but the gap between prices here and from the USA is simply too wide even considering the ever falling USD value. This will prevent the market from a sharp rise, but if the fundamentals remain the same in the coming weeks we belive, that more and more pressure is going to be lifted from the market. The total extend of activity in the coming two weeks will certainly let us know if the growing optimism is justified and prices will settle.

Dairy cows

15/24,5 kg

22,5/23,5 kg

13/22 kg

20/21 kg

€ 1,60

Steady

25/29,5 kg

27,5/28,5 kg

22/27 kg

25/26 kg

€ 1,43

Steady

30/+      kg

33,5/35,5 kg

27/+   kg

29/31 kg

€ 1,18

Steady