What happened this week: The market situation is multilayered. The easy and simple statement would be to call the market difficult and weak and superficially analyzed this is also correct. Prices are not moving upwards and in most cases tanners are bidding down and isolated sales have been booked at much lower than asking levels. All this applies for the European customer base, because now the weakness of the USD is starting to reflect also in the market at home. In the meantime remained prices in Asia reasonably steady and trading within a range of one USD up or better - down. With the USD trading now around € 1,15 (7 % less than a month ago) the reduction of the € revenues is lowers the market levels automatically. Most concerns derive from the present status of the market and demand from Italy. All reports from customers and agents in the region are entirely negative as far as leather orders and leather prices are concerned. No one should have expected too much from the Italian market in September, but that things have turned  so bad was certainly not

to be expected. Many of the European hide suppliers depend strongly on the Italian market, and so is  their impression about the market situation in particular very poor. Taking a bit wider perspective we find global sales less enthusiastic than in August, but it would be exaggerated to focus just on the situation in Italy. Hide demand has not dried up completely. As long as the price adjustments to the individual market situations are made, sufficient sales to various destinations can be generated. If, and this is certainly the case, individuals have taken a market view and had or refrain now from sales,  they have surely built inventory which they wont like too much now. As already mentioned, the critical question is not the global demand for raw material or the sales of leather, the critical question is the price. Butchers have also to understand, that the situation for the valuation of the hides has changed already for long and is – in most cases – only just determined by the deflationary trend in consumer products. Temporary positive variations due to currency fluctuations can not be

considered as a trend. Under present conditions the realistic price levels are the ones seen prior to the holidays and this has to be achieved also at the abattoir door to enable processors to operate at an adequate and  justified margin.  The kill: Pretty much unchanged on the expected seasonal levels. In the coming week another round of school holidays and a public holiday next Friday will not allow numbers to increase any further. Nights are getting much colder now and so we expect slaughter to stay reasonably steady until we might see another little jump when we weather conditions are really deteriorating.  What do we expect?  Trading in Europe will remain light until the abattoir prices are  fixed. There continues to be a steady and underlying demand for hides in particular from Asia. Also Europe will eventually pick up. However, there is no shortage of raw material and a vast need for price adjustments. Under the precondition, that massive reductions in the abattoir buying (15 % and more), allow selling prices to adjust by 2-5 % we are quite optimistic, that  sufficient selling volumes can be generated again to support market levels for a while.