For September the hope of lower abattoir prices had to be buried again and the hopes are now pinned on the months to come for a return to some kind of reasonable margins. Sales for bulls and ox/heifers were not as active as the cows, despite many still claiming that there is more demand than supply for the male section. We would not fully subscribe to this view and we think that the bottlenecks seen in June and July are behind us for the moment. With the US market also falling slightly, European bulls are no longer the cheap buy they once were and as a result some of their support is fading. If this also applies to the extra heavy, high quality end, it remains to be seen what will happen in the weeks to come when the next round of purchasing is prepared by the tanners. A lot will depend on the outlook for automotive sales and the production for the coming months as supply can be expected to be sufficient.

Apart from the above most of the reports can now be copied into each other: Leather business can be called good and we have been pleasantly surprised by the bout of orders and activity tanners have reported in September so far. On the other hand, the massive pressure on prices remains and we can’t remember a time when such a generally positive tone was not eventually converted into a better mood for the raw material business. However, the fact remains that there is still enough raw material around in the medium-to-lower quality range to cover the present (better) needs of the leather industry. So, many sellers in many markets still prefer to stay in a sold position rather than to gamble on better times in the near future. Consequently, it seems that the market at present is in balance between tanners and suppliers. If there is any tension in any one market, tanners are still finding sufficient alternatives to protect themselves from higher prices and, with the rising seasonal kill, buyers remain quite relaxed about the raw material procurement for the short term.

The kill: The kill remains steady although the numbers this week were a bit lower than in previous weeks. However, we don’t believe that this is going to mean anything special and we expect numbers to stay steady and most likely to increase in October. Simply put, it is following the normal seasonal pattern of the year.

What do we expect? We can just be happy that the leather business has picked up at the right time. Otherwise it might have been a difficult September, at least for furniture-related hides. The market is still facing pressure on most grades, but, due to the reasonable volumes sold, more confidence has returned and offers for cows have found a more solid base. A firmer US$ is adding to this. However, we still believe that the situation remains volatile and a new trend is not yet established. Weak to steady might describe the outlook best.