What happened this week: Once again, we could basically copy last week’s report for this week. Well, not quite, because the US$, which then looked to be so weak, has in fact recovered significantly and eroded most of its losses from the first half of August. As a consequence, calculations for export markets returned to more friendly levels after having taken a sharp dive in the past few weeks and burdened euro revenues greatly. This, unfortunately, did not stimulate the demand side, but the general feeling was better.

Business was restricted to a few bids and sales to export traders which were more than likely nothing more than deals to cover existing sales to the Far East, in particular to China, where they had taken a chance on better currency rates to cover them. Apart from these sales, business was again patchy. A load here, a load there, but there were neither big volume nor big prices. In fact, it is as though the holiday season has just started now and not four weeks ago, although most are already starting to return to work. But, to be realistic, the market pattern is nothing unusual for this time of the year. 

People continue to expect the holiday slowdown to have an effect too early, but the same applies for the expectations as to when business is going to resume. One can easily sense the same market fundamentals as in the previous years. Most tanners around the globe made their arrangements some weeks ago and are now focusing on the issue of restarting production, sorting out what has happened during the vacations and in the case of the tanneries, which have not been on holiday, to wait for the trade shows and customer meetings scheduled for the coming weeks.

Despite some smaller niche market developments, such as the movement in the South German market, nothing particular has happened in the raw material markets and leather producers are quite convinced that they are not going to face a shortage of raw material over the months to come and they might well be right. Consequently, buyers are taking it easy and buying what they need and are still hoping to find some bargains in the near future. At the end of the day, there is no reason that market will not sty in balance also in the coming weeks. Everyone, sellers as well as buyers, will adopt a wait and see position and decisions are set to remain coincidental and driven by the daily mood of one or the other. We cannot find any reason at the moment why the general balance of supply and demand which we have seen for such a long time should be disturbed in the short term.

From the leather side there is very little news to be obtained. It will be interesting to see if garment leather attracts some more interest next season and what effect the high fuel costs are going to have on global car sales in the next quarter.      

 

The kill: Nothing new really. The kill is at a reasonable level and there is nothing to complain about. The shortfall from the second quarter is now history, although the declining trend in the kill has certainly not stopped. However, looking at the herd and with autumn approaching, general supply is not going to be a problem.  Structural changes in the beef industry might have more effect on the by-product business than anything else.

 

What do we expect? Next week, European tanners will be back at their desks and this should enable us to at least concentrate on the repeating programmes which are still open for renewal. This will, however, not have any influence on the market, as it has already been planned. We expect the rest of the market to remain stable, especially if the US$ continues to be of assistance for the coming seven days.