What happened this week: The reduced market activity continued also this week – as well as the pattern of any activity seen. If there was any interest it came again from overseas and was -as now already a tradition for 2003 – only for dairy cows and low grades. European trading continued to be paralyzed and if there was any interest it was also here for dairy cows. The traditional European trading or renewal of contract for bulls hides was burdened by the large difference between sellers needs and buyers opinions. This is basically caused by the fact, that prior to the abattoir buying already positions had been created from the buyers which at the end – ‘thanks’ to the low kill – did not materialize. Now it is becoming difficult to make ends meet. However, one way or the other it will happen. Anyway monitoring the situation in Europe the situation is not really promising. Tanners – in most cases – use their inventories and continue to complain about as well insufficient orders as well as continuing massive

pressure on prices. Orders for leather in most cases seem to start with the price and not with the article. Having, said this one can not refrain from the fact, that all the wait and see attitude is also creating more and more a need to decide in the trade. It seems at least questionable if lower prices are really going to increase demand for leather in the short term. Having said this, one can feel at the same time, that many tanners with relatively safe and steady production program would take the risk to decide on larger purchases if prices would be ?? percent lower. Others seem to feel more and more the re-structuring of the leather business and the effect of the relocation of more and more production into the Far East and here in special to China. One can not ignore the fact that an increasing part of the production has or is moving to the Far East and South America. Less for the reason of the cost and the quality  of the  production of leather, but more for the manufacturing cost of the consumer products. Nothing new, but the effects may have been neglected for too long by

many. This excludes only the high quality and image products and is pronounced by the currency effects. So, we might continue in the period of transition until the restructuring is finished. The kill: The sharp decline came to a hold on the low levels reached. Kills are at present 25-30 % below the levels we have seen in December until mid January. As already mentioned we believe that the levels will remain low for some time. What do we expect? The next week will be determined by the regular deals and the anticipations for the further development in the world. Without having a clearer picture we will continue to proceed the way we did on the past weeks if not months. Most businesses are still running on the minimum necessary until the picture gets clearer and more confidence returns – at least in Western Europe. In our case we don’t expect that prices will change very much. Cows are well sold, but don’t have much upside potential while bulls are protected by the low kill and next weeks contracts will also be within the normal range of daily trading. I would require a major change of the fundamentals for a larger move.