What happened this week: The summer started early this year as general activity was once again reasonably quiet. It seems that business is turning more and more into holiday mode. The regular programmes with the European customers are proceeding on a steady basis, but any additional demand which would trigger some market action cannot be determined. Activity was also hindered by a holiday on Thursday in most parts of Germany.  So most activity this week came from abroad. The ups and downs of the $ made trading almost impossible at the beginning of the week while towards the end of the same a satisfying number of sales where generated. In the focus of interest again were dairy cows which sold in acceptable volumes. However, only a very lucky hand in the currency market made prices acceptable. Unfortunately, the attempt to reduce abattoir prices significantly for the month of June was unsuccessful. Various of the classic political games and the low kill again gave butchers the upper hand and consequently processing margins remained insufficient. Many did not take to the increasing costs due to lower production and after taking the lighter weights into consideration. The fight is now back on the selling side. Apart from the seasonal effects, the leather business would appear to be quite intact. However, one has to realise that tanners – at least for mainstream products - have become more and more flexible and buy hides increasingly in line with a target price system.

Since for quite some time there has been no substantial gap between global demand and the supply of hides, market volatility has declined and tanners interest has just shifted to the origins that are willing to meet the target prices for raw material, whenever prices start to move out of the target frame. With currency fluctuations, seasonal influences of production and the massive purchasing power of finished product buyers, hides were always available at a certain price somewhere in the world to satisfy demand. We fail to foresee any short term change as there are almost no signs that the balance of physical supply and demand is going to be remarkably disturbed over the summer. A major factor will be whether the European holiday season can be compensated with enough business and shipments overseas. The kill: The kill remains quite steady. Watching the numbers, they are seasonally lower, but they are better than we really expected and bottlenecks have been avoided so far. The Russian ban on EU imports has been lifted and this negative impact has also been lifted. We still have another four weeks until the holiday season really starts and expect no real changes until then. What do we expect? We can only assume that the market will continue to sidestep. We cannot find any reason why a new trend will be established and changes of prices will be more a reason of coincidence, feelings, currency or emotions. In the next weeks most of outstanding contracts until the summer holidays will be booked. As far as prices are concerned we expect only adjustments to be made where previous levels were not adequate.