In the second half of the week the currency market re-entered the foreground. The rising value of the US dollar has changed calculations and the revenue for export sales improved by the hour. With absolutely unacceptable processing margins in recent months, it has not offered a windfall profit like last year but it has eased the situation slightly.

Last week’s sales can at best be called patchy. All kinds of materials changed hands with heavy interest on dairy cows. However, most of the inquiry came from various export traders who are still negotiating below the asking levels of most European processors. They are trying to build a short sales position against producers in the hope that buyers’ needs are satisfied and that they can cover their shortages when processors fail to find interest at their asking levels. So, in the meantime, we have a multilevel dairy cow market with traders marking the bottom in the mid $40s, standard processors slightly below $50 and the premium packers still fighting to achieve levels above the famous Asian $50 level.

With high price sensitivity and the constraints of leather prices, Asian buyers are, once again, the first ones to purchase bargains in the hope that quality expectations are met when the goods finally arrive. Hence, when one stuck to the asking levels, sales were limited, with traders accepting most of the bids circulating the market. The question remains whether the positions taken last week will be successful or not.

At least the market situation seems to be similar to other global markets. Locally the trade was more affected by financial difficulties of smaller processors. Just as one started wondering about economical logics and abattoir price levels, it was proven once again that business miracles are virtually impossible. With abattoir-buying for May still in full swing and abattoir hides available in a generally undersupplied market, the domestic trade was busier analysing the local situation and taking relevant actions rather than bothering about hide sales. It will be interesting to see the final influence on the market when everything has settled down a bit.

The kill: Last week’s slaughter was a bit better but still very low and its now time we accepted the situation. Slaughter statistics for the first quarter show a decline of 15% for the quarter and of 22% for March alone, and we think April will be worse. The kill of bulls is down by 36%, while cows are only 5% less. All this comes as no surprise but shows how much the market has to digest and find solutions. Another holiday takes place this week so slaughter numbers will be low again.

What do we expect? Subject to the US dollar we cannot see a reason for change in the price structure. The present 2% currency gain is taking some of the price pressure off the market but has not had any real positive impact. Most of the market activity has to come from overseas but we cannot expect many impulses in the short term. Consequently, the present price band remains intact.