What happened this week: Our expectations for this week have proven quite accurate, with general business activity continuing to strengthen among low grades and dairy cows in particular. Asian as well as Italian buyers started to replenish their inventories and every purchase was conditioned by very short delivery terms. Whether this is a general trend or just a move of individual companies it is probably too early to say. The firmer trend in the US dollar has helped calculations and despite the fact that prices in Asia have not increased and will not do so, the revenues are starting to reach better levels if one compares abattoir to selling prices. Low grades have also found a lot of interest, confirming the existence of high price pressure on finished products that tanners are only able to meet by using cheaper raw materials. Early reports from the furniture fair in Cologne have so far brought no real news. High quality luxury items or very cheap models still prevail and hopes for the return of middle priced items to the market have been quashed. Yet there is a growing sense that a rising demand for top quality selections cannot be met by the raw material supply. This has already resulted in many tanners struggling to maintain the profitable top selection business as they fail to handle the increasing inventories of average selections. On the whole, there is no reason to be optimistic about furniture leather demand and prices. Most of the production capacities in Asia are still operating at less then 100% capacity whilst the trend of continuing price pressure remains strong. Unusual claims from Asia for last year’s shipments requesting compensation have also been recorded. This is yet another indication that the business of upholstery tanners is far from satisfactory and that they are trying to emphasise the problem. The situation in the side leather market continues to improve although the ‘low season’ atmosphere is felt widely. Lighter weight material, however, is still in adequate demand and will keep the interest provided prices remain within a certain frame. The only exception is the weight range between 5/12 kg where hardly any interest is sensed at all – it is truly intriguing that the tanning industry has neglected the product for almost twp years. Garment leathers are still in the doldrums with little activity and high price pressure. This is not only an issue with dairy cows but also affects lamb and sheepskins.

The kill: The weekly production is now settling on the lower seasonal levels usual for Jan/Feb. A number of sources expect a new yet much lower round of males than in the last quarter of 2004. This is linked to the last remaining subsidies which will be removed at the end of the first quarter.

What do we expect? We have to remain cautious about the market situation and there is little reason why market activity should increase much more. Despite the fact that tanners’ inventories are low, both the uncertainty about future leather orders and the persistent pressure on leather prices have so far failed to deliver a base for a better market. The only remarkable factor here could be the US dollar, a slight fluctuation of which would influence prices marginally. We still have to wait for the results from the Cologne fair as they might justify further purchases for some tanners. However, we remain of the opinion that the market has little reason to abandon its current sideways trend.

Type	Weight range	Avg. green weight	Salted weight	Avg. weight salted	Price per kg green weight	Trend
Ox/heifers	15/24,5 kg	22,0/23,5 kg	13/22 kg	20/21 kg	€ 1,45	Steady
	25/29,5 kg	27,5/28,5 kg	22/27 kg	25/26 kg	€ 1,35	Steady
Dairy cows	15/24,5 kg	22,5/23,5 kg	13/22 kg	20/21 kg	€ 1,40	Steady
	25/29,5 kg	27,5/28,5 kg	22/27 kg	25/26 kg	€ 1,27	Steady
	30/+      kg	33,5/35,5 kg	27/+   kg	29/31 kg	€ 1,18	Steady
Bulls	25/29,5 kg	27,5/28,5 kg	22/ 27 kg	25/26 kg	€ 1,50	Steady
	30/39,5 kg	36,0/37,0 kg	24/34 kg	31/33 kg	Share this story: Leatherbiz.com cannot be held responsible for content if the language setting is changed from English. The translations provided by Google Translate are automated and therefore might not be accurate and may contain incorrect, offensive or misleading language. We offer this facility as a guide only.