What happened this week: There is gradually less to report as trading activity is slowly declining, although it is still fairly high for a pre-Xmas period. The pattern of interest and demand reflects what we have been seeing over the past weeks: upholstery on the whole is very slow with only isolated request for dairy cows. Consequently, tannery business here remains very low too. This is understandable taking into account the troubled market for finished leathers, particularly in the medium and lower end. The ongoing demand from export traders is currently impressive, but we fail to understand whether these are short coverings or long positions. Monitoring current market levels and prices has finally paid off in that it is hard to believe that this could be back to back business. Whatever the reason, buyers doubt they will buy hides more cheaply and so they are purchasing them now. We feel a decent proportion of the traders are concerned about the rumours of substantially lower slaughter in the first quarter and that, with fewer hides available, the wind on the market and availability of material could change quickly. Although we do not expect any improvement from the leather business in the first quarter, one has to accept that there is no huge accumulation of unsold hides at the moment. Consequently, a reduction in slaughter could change the situation considerably. We can, however, remain sure and positive about side leathers. Lightweight material of good and low quality and male hides remain in decent demand and shipments are not affected. Most European and overseas buyers are asking for their deliveries regularly and on schedule. In general, the feedback from the market and the retail sector is strong for shoes and leathergoods. The currency front has also relaxed this week and, although the dollar is at 1.32 or 1.34 to the euro, its steep decline is over, making calculations feasible and halting the descent of market prices. Our prediction of the hide market entering into a period of stabilisation has, therefore, proved correct, at least for this week.

To summarise the pre-Christmas period, we can say that except for the problems of excessive production capacity in the upholstery segment, the leather market is currently in a rare state of equilibrium.

The kill: The kill remains exceptionally high with farmers and butchers busy netting subsidies. While those for meat plants finish at the end of the year, farmers still have some time in 2005. Despite the high slaughter in 2004, the consequences of a decline in herds will be felt in the years to come and reductions in slaughter numbers will be tangible. In the forthcoming weeks, slaughter will remain high with only brief interruptions on Fridays.

What do we expect? Trade in Europe will soon dry up and we will be able to see if overseas buyers become active towards the end of the year. We are not overly pessimistic and expect interest to develop in the run-up to January. A round of inventory replenishment will also take place. This, combined with reduced kill, could affect the general mindset but not in the coming weeks.

Type	Weight range	Avg. green weight	Salted weight	Avg. weight salted	Price per kg green weight	Trend
Ox/heifers	15/24,5 kg	22,0/23,5 kg	13/22 kg	20/21 kg	€ 1,45	Settling
	25/29,5 kg	27,5/28,5 kg	22/27 kg	25/26 kg	€ 1,35	Settling
Dairy cows	15/24,5 kg	22,5/23,5 kg	13/22 kg	20/21 kg	€ 1,35	Settling
	25/29,5 kg	27,5/28,5 kg	22/27 kg	25/26 kg	€ 1,25	Settling
	30/+      kg	33,5/35,5 kg	27/+   kg	29/31 kg	€ 1,15	Settling
Bulls	25/29,5 kg	27,5/28,5 kg	22/ 27 kg	25/26 kg	€ 1,50	Settling
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