What happened this week: This week was again one of the quiet ones – at least as far as the hide business was concerned. The round of business seen in the previous week from Asia did not find a follow-up. Sales of bovine material were limited to bits and pieces and some of the regular repetitions with the regular clients. Today was a bit more active from Asia with bids for dairy cows coming in at USD 1,00-2,00 below asking levels, which we decided to turn down. Most interest was seen on low grade (cheap) material.  Interest for light weight skins continued to improve in reaction to the change of the shoe season and also inquiries for sheep and lambs were plenty with the start/preparation of the new double face season in Turkey.  Many shoe leather tanners in Europe expect new impulses from the GDS Shoe Fair in Düsseldorf this week. With the experiences from the last years, however, we feel that trade shows don’t change business anymore by much and we can just hope, that people don’t return too pessimistic or disappointed when their expectations are not met. May be we get some  confirmations about fashion trends, which would enable to predict abit more the demand for the different kinds of hides in the second quarter. In the main market of cattle hides the gap between prices in the Far East and Europe is closing further. After the moderate decline of USD prices over the past weeks  finally the Italian tanners had to recognize, that if they want volumes of their preferred supplies they have to adjust their bids for the standard dairy cows from Northern Europe. So bids were lifted by 4-5 % and depending on transport cost and weights prices are getting now close to the levels obtained in the Orient. If interest is carried over into next week we might see another adjustment and then price levels are more or less even again. This is however, not an improvement in the general situation, but just an adjustment as the gap could not remain as wide as it was in the first weeks of the New Year. So, at the end we are back to where we where mid December and everything starts new again. The market environment remains also still the same with decent demand for leather and massive pressure on leather and finished product prices. However, after the BSE hype of January prices have retreated to levels where most tanners see profitability again and they try to push it just a bit down to expand margins to comfortable levels. With the driving force behind raw material prices of the past years – the automotive tanners – now also experiencing headwinds from their customers as well as more competition hide prices are capped also from that sector. As long as supply and demand remain in balance and tanners continue to source globally prices will continue to be trapped. Our buying was a disappointment with the prices at the abattoir remaining mostly unchanged and the needed declines for bulls were not achieved. The kill: Very steady with exceptionally small variations. With the weather still being winterly we still cant expect any changes. Weights however, start to fall already. What do we expect: If anyone has a good argument why prices should change we’d  like to hear it. The market has so far comfortably settled on the present levels. Buyers and sellers are trying hard to move it their way, but any success is not only very limited, but also shortlived. Only a dramatic change in the supply/demand ratio can change this. However, due to the steady demand from Asia and declining kills we see the market well supported, but still tanners find enough merchandise available. Lets see if the trips to Asia in the next weeks will change things either way for a new trend.

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