What happened last week: Last week was the first week clearly defined by the holiday mood. The summer season is now starting to move from the north of Europe to the south and this is now fully reflected in the broad business environment. While we still had some hide purchasing in Europe, sales activity fell into the doldrums last week. Shipping departments were still too busy to fulfil the remaining requests from the Mediterranean and sometimes just one day can determine whether goods can be delivered or not. Overseas sales were also substantially reduced last week.

The weaker dollar and the falling US cow market have had their consequences. Asian buyers hardly ever buy into a suspicious market and since they can see American cowhides reacting to the price levels in Europe, they are pulling out as usual. With the weaker dollar, asking prices went up slightly. This has not met with a positive response and the few bids that came in from Asia were below asking levels. Not taking them last week meant loosing them. Consequently, sales were only sporadic and covered low quantities, quite the contrary to the previous week.

Abattoir prices for bulls rose again in July under the excuse of a low kill and with an aggressive tone with which the abattoirs are now responding in the by-products section to the restructuring and concentration process. With light average weights and a tough position, tanners are finding the high raw material prices not easy to deal with. However, most of our colleagues are pretending that the market is going to accept the increased prices simply by following the logic of reduced supply. This may not be the timing for it, with most buyers in a holiday mood and soaks suffering interruptions.

Discussions will not be too friendly, trying to pass and fix the present levels onto the leather industry. It is now time to start thinking about the outlook for the rest of the year, provided there is interest in the potential of the hide market in the coming months. There is little doubt that the side leather business will perform well.

Fashion will remain an important factor that will show if the trend for light weights is going to continue. It will be curious to see if the leather fashion will respond to the abundant availability of cheap hides from the southern hemisphere. Is there any hope for a recovery in standard leather garments? Can the leather upholstery take the full benefit from the season starting around October? With hide prices in all our categories at no-man’s land levels, any direction is possible but we continue to believe that the strongest influence on European hide prices remains the dollar. Other parameters remain trapped in the increasingly limited price flexibility of the final consumer markets.

The kill: After the sharp decline seen at the end of June and beginning of July the slaughter has normalised again and we have returned to the expected seasonal levels for this time of the year. The interim shortages are not serious anymore and with a lot of the fresh hide users on holiday things have become much more relaxed. Depending on the regional holidays we expect the slaughter to remain steady in the coming weeks until mid August.  

What do we expect? Anything other than the continuation of the coincidental summer trade would be a surprise. While Europe is shutting down, hope remains for more activity from Asia. However, we find it hard to believe that any major price variations can be expected before the end of the holiday season.