What happened last week: Last week has confirmed the expected low activity levels and generated little business. As it progressed it became clear that we were facing a serious problem in the upholstery/garment sector. Everything that has been mentioned over the past weeks, if not months, on the slow demand for upholstery leathers is increasingly more evident and clearly marked by the fact that sales and shipments of dairy cows are not reaching the constant levels needed to clean productions and inventories. Rumours on warehouse stocks of salted hides circulating the market are currently on the rise but it is unclear whether the hides are sold and waiting for shipment or whether they are unsold inventory built in the expectation of lower kills and higher prices in the second quarter. While the bet on the lower kill might be won, the bet on higher prices is not. The trade shares a common opinion that the raw material market is essentially demand driven and it is finding confirmation in the present situation. All this, however, applies mainly to the medium and lower price range of upholstery leathers. Higher quality leather, heavy substance products and those who depend on the supply of fresh, chilled European bullhides are hardly hit at all by the freefall in slaughter and production in the past weeks. While they might have a better cushion in their calculations, they also claim that margins are eroding yet the supply here still prevents a substantial correction of prices. It has to be added that processing margins in the last months eroded, vastly due to the unjustified increase in abattoir prices. Sales last week were once again isolated and while only a few cows found homes in Italy and Asia, light weight material was once more the focus of interest. Skins of weight up to 25 kg, suitable for all kinds of shoes and leather goods, are therefore enjoying continuing interest. Sales of bulls focused mainly on filling production holes and the numbers in total are certainly not satisfactory. The more the week progressed the more the tone and mood turned negative, which is quite unusual for a week preceding the APLF when people normally turn away from market sentiments and postpone their judgement to the following week when the results of the Hong Kong show are out. At least few have high expectations which so often cause disappointment and trouble in the market once the fair is over. This year the players have obviously taken a more realistic position before their departure. This could well be because those who have already departed for Asia are not sending too many positive signals regarding their visit.

The kill: No good news here. The end of the milk quota year, the Easter holidays and a sharp drop in the demand for beef had its effects on the kill this week. After the dreadful numbers in the week preceding Easter, last week was hardly any better with the supply of bulls down by at least 50%. Due to the weak demand, anything other than a slight recovery in the next weeks will be hard to obtain.

What do we expect? We do not think that the forthcoming weeks of the show in Hong Kong will change much. But it would help if the pessimistic forecasts were neutralised a bit. The event should at least confirm the real situation of the leather demand through the number of people getting together and exchanging information. We expect the pressure on cows to grow with little help from the US dollar.

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	€ 1.50	Steady
	25/29.5 kg	27.5/28.5 kg	22/27 kg	25/26 kg	€ 1.33	Steady
Dairy cows	15/24.5 kg	22.5/23.5 kg	13/22 kg	20/21 kg	€ 1.45	Difficult
	25/29.5 kg	27.5/28.5 kg	22/27 kg	25/26 kg	€ 1.28	Difficult
	30/+      kg	33.5/35.5 kg	27/+   kg	29/31 kg	€ 1.18	Steady
Bulls	25/29.5 kg	27.5/28.5 kg	22/ 27 kg	25/26 kg	€ 1.52	Steady
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