What happened this week: In reality it was a quiet week. As usual in September cools the initial enthusiasm after the holidays off by mid of the month and sellers have to return to reality. Unfortunately for us fell the time of ‘enthusiasm’ exactly into our monthly abattoir buying and prices propelled up by 7-10 % at the abattoir door without any real justification. The weak USD and the depressing situation in the European tanning industry did not make things any better and leaves the question open if there will ever be a learning effect in this trade. Leather business is always in a low season phase until mid October for various reasons and where the market is heading resp. how leather demand is going to develop we will not know before the end of the month or even until October. We don’t want to sound too pessimistic as nothing  special has really happened except that business did not perform as positive as many had bet on. So sales have been this week just normal. Interest for dairy cows remains very solid, but the

increase of prices at the abattoirs could  not be  passed on to the market. The weak USD and the softer undertone in the USA encouraged buyers to bid lower and to take a very strong position. At  the end and after hard and tough negotiations sales were concluded at steady prices which means substantial reduction in gross margins. Nothing from the abattoir prices could have passed nor any compensation for the decline in the USD. Anyway, the good in the bad remains the fact, that at least the fundamental demand for cows from overseas remains intact and there is no sign of a slow down in interest for female hides from that destination. A bit different was the situation for bulls, although also here customers were fighting for steady prices. At the end moderate increases were made. Nothing to compensate for the increase in the buying, but at least a fair gesture from the regular buyers to give a bit of a hand for the market situation. So, at the end the week generated acceptable numbers of sales with not satisfying revenues due to the stronger EURO and and inflated abattoir prices.

Many things bubble now up to the surface. The massive pressure – frequently discussed - on leather prices was also demonstrated by the results Natuzzi had to publish during this week. Another prove, that in the present deflationary environment is no room for price increases yet. The kill: Further improving with the school holidays now over in all Federal States The summer draught is still pushing farmers to sell cattle, what is no good as far as weights and quality is concerned. The cattle sold first is not the one the farmer wants to keep and this can easily be seen in the low avg. weights and the weak and thin structure of many hides delivered. We believe, that this is going to last for some more weeks. What do we expect?  Many in Europe will now have to accept the reality. Markets are at best steady and the hype in Asia is also calming down. So, back with the feet on the ground. For some time we believe, that the market will stay again in a narrow trading range and new directions can only  be seen in a few weeks. We are positive for the demand of leather in the last quarter, but within a limited upside price potential for raw materials so far.

Dairy cows

15/24,5 kg

22,5/23,5 kg

13/22 kg

20/21 kg

€ 1,83

Softer

25/29,5 kg

27,5/28,5 kg

22/27 kg

25/26 kg

€ 1,60

Softer

30/+      kg

33,5/35,5 kg

27/+   kg

29/31 kg

€ 1,38

Softer