What happened this week: It sounds strange, but it was one of the most difficult weeks of the year. Many of the long term program contracts for bulls were due for renovation and the hard confrontation we expected to come materialized. Tanners came into the negotiations with well prepared and preconceived price ideas, which were far below sellers needs and ideas. This made the discussion extremely difficult. The parallel negotiations with abattoirs in South and North Germany which, however do not cover the same time periods have again created discrepancies between the adjustments of the two markets. As usual tanners were claiming the full extend or even more than that of what the market rumours were about the declines at the abattoir doors. Overlooking, that hide processors margins have been poor or not existing for quite a long time during the year and need expansion as well. So, instead of trying to get a common and fair distribution of what was so desperately needed, tanners insisted in their rigid positions which were unacceptable for those suppliers who try to maintain a certain continuity and quality of the supply chains. At the end were the solution found – as far as we are concerned – an investment in the future relations and tanners have to prove in the coming year how serious they are about supply management or if they want to return to volatility and speculation. The rest of the market was reasonably active and at the end of the week we had another active round of dairy cow buying from Asia. Again almost immediate shipments were required (arrival prior to the Lunar New Year), and the dominating buyers were upholstery tanners from China. One can realize, that tanners are enjoying additional orders and also find a margin on the present price level. In addition we would not be surprised if the lower seasonal kills in the Southern hemisphere already throw their initial shadows over the markets Prices for cows moved slightly up vs. a week ago, but the weaker USD is absorbing price gains. Summarizing the market one can see, that in furniture and automotive tanners have loosened the breaks and take benefit form the favourable raw material prices.

The kill: The kill remained high and it is relaxing, that sufficient supply is available to plan sales and deliveries for a certain period of time. One can assume, that the level of production will indeed continue until week 51.