What happened this week: The market developed into the classical pre-holiday pattern. Those markets and suppliers which are focussing their business on the European tanning industry continue to be nervous about the ability to move enough hides over the summer holidays. This applies in particular to origins such as UK/Irish, since their marketing potential remains still limited by the import restrictions of various countries in the world. With very limited activity in the traditional European markets, the tanners were ready and had plenty of time to display further pessimism and – as usual – the situation was used to try to plant the seeds for further uncertainty and declines. In part, some of it might have been successful, but sales in Europe remained limited and so was the success of the operation. Quite the contrary can be reported from overseas markets. Interest for dairy cows and ox/heifers remained strong and – at least in our case – continues to

outstrip supply. In particular the lighter weight ranges and traditional categories for the Asian markets are in strong demand. Even the lighter weight slaughter mix of the summer does not assist enough to meet the volumes requested for the time being. Heavier weights of females – exactly the ones which had been the ‘hot cakes’ of the past years – suffer from the poor state of the furniture upholstery business in Europe and fortunately their production is at the seasonal lows. Prices remained exactly where they were a week ago and range still between USD 45-50,00. Males continue to be less exciting. Due to the long term arrangements and the low kill, all of the ‘reliable’ supplies are placed in strong hands, production is just enough to maintain existing delivery programs and to keep the JIT-deliveries running. Despite the general market trend, remain hides with extra heavy substance in very tight supply and tanners are not getting the volumes they need. Unfortunately, because the demand for extra heavy leathers seem to one of the very bright spots in the

global leather business. The SARS problem is Asia (China) is easing quickly and business operations and travel return back to normal. This can also easily be seen by the increasing number of e-mails and commercial requests deriving from that part of the world. The kill: No news. Production numbers and slaughter weights are quickly heading to their seasonal lows. Another holiday next week in the catholic parts of the country will again weigh on the slaughter numbers. What do we expect? Although the market pattern seems easy and clear to everyone, the number of tanners with a long term view is increasing and many realize, that hide prices are reaching the low side of the long term range. However, the biggest problem remains the general price deflation and the global fashion which is supporting a unified price structure for finished products. The next weeks will not set new directions, and it might need some time to move remaining stocks of raw material from weak to strong hands, but the cycle of the price correction is certainly getting daily closer to an end.