What happened this week: This week was again a quiet one. As mentioned last week, Asian tanners have decided, on the whole, not to return to the market before the end of September in any significant numbers. This might be a mixture or sufficient inventories, cash flow problems, and uncertainty about prices and volumes of future leather orders, but as a consequence of this, cow sellers are losing confidence in the market after the holidays. As a result, the only deals remaining were regular sales of bulls to the European tanning industry and some spot interest for wetblue items, where incoming leather orders needed to be filled with prompt available material.

As a general rule, enthusiasm within the business starts to fade and this year is a classic example of how things can be misinterpreted over the summer. Every year there is hope that business will pick up immediately after the return from the holidays. However, at the end of the day, tanners tend to always be covered for the weeks after the holidays, and furniture orders and production do not get back to full speed before the end of September.

In shoe leathers the situation was a bit better despite bad news from the sector in general. One of the largest German shoe retail organisation, including the Salamander shops, filed for bankruptcy during the week. Although it is said operations will continue for the time being, the situation is creating confusion and   disruption that will affect the cash-flow down the supply chain. Furthermore, the names of the Tuscany tanneries which are to close are finally circulating within the trade.

Despite all of this, most of the interest seen during the week came from shoe tanners in Europe and the Middle/Far East. Some spot business was concluded, but was of no significant size. Prices for male hides were able to hold their own, however - without any sales having been made - we would describe the cow market as under pressure, also due to the weaker USD towards the end of the week.

We continue to be driven by the leading markets in the Americas where prices are also said to be slowly eroding. Price has once again become the driving force in mainstream products and everyone now feels the same, that despite a positive impression about the demand for leather in general, tanners feel less confident and also are forced to wait for bargains due to economic factors. With the growing mass production of global products, the return on most hides is no longer determined by the fine tuning and optimisation of selections, but by simple cost and volume calculations.  

The kill: The kill took a bit of a break this week. High prices for cattle and the beautiful weather slowed numbers down again. However, slaughter is normal for the year and we are now in the normal cycle of increasing kills.

What do we expect? As many in the trade realise more price pressure is now building on the hide types which are today found predominantly in Asia, the weaker USD is also weighing on calculations and so we would not be surprised if prices for cows in € begins to fall. Bulls might hold, but if cows are adjusting to new levels the rest will need to follow eventually.

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