What happened this week: Bologna is over and we assume that most visitors were pleasantly surprised going on the reports that most of the exhibitors have given. There was an explosive array of beautiful articles, fashion, and the latest advances in finishing technology and it is clear that many European - or better said Italian tanners - have taken up the challenge and have prepared themselves to face the competition from around the globe. Whereas at shows in the past,  concerns about the shift of production to low cost countries has been the frequent focus of discussions, this time we saw a lot of optimism and confidence and only a few comments about the ‘threat’. This positive impression applied mainly to tanners producing shoe leathers or fashion leather for the leathergoods sector and confirmed the feeling that one has had for quite some time.

More of a surprise was that the upholstery tanners we were able to talk to did not seem to be stuck in depression anymore. A lot of technical progress could be seen in this sector too. It is always fascinating how much can be made from even a lower quality piece of raw material, and it was noted that even more lower quality (and also lower-priced) hides can now be converted into a piece of leather of impressive quality. Sales in this sector were also satisfying and the interest focused once again on lightweight material and everything suitable for side leathers, although follow up interest on cows was also seen.

Reflecting on this, we assume that most visitors left the show with a generally positive impression, only those who came in the hope of finding more interest for European lambs may have been disappointed.

The FMD problem in Brazil was frequently on the news and discussion agenda. All kinds of opinions were swirling around, but at the end of the day nobody was really concerned about a persistent influence on the supply of hides for the global market. The normal reaction of suppliers to refrain from offers or to raise prices was nowhere to be seen and quite the reverse was true. One got the definite impression that if there was a chance to unload some hides; the opportunity was taken rather than wait for better times to come. This brings us to another interesting result of the trade meeting. Only clients looking for light material were willing to pay fractionally more for raw material, for standard grades they are stubbornly refused any increase in prices at all. Insisting on price increases is curbing negotiations and sellers are refusing to make reductions.

So, the price for hides, selling predominantly in Europe, did not move at all. Little interest was seen from Asia as one gets the impression that business is a bit slower and that European dairy cows are no longer competitive. This is also reflected in slower shipments and we believe that the traditional ‘Asian cow’ could face some price pressure.

The kill: The kill is continuing to increase further and supply is pretty strong and good. There are a lot of factors that point in the direction that this going to last for a while to come.

What do we expect? As mentioned above, it seems that most hide categories are in reasonably good shape and see hardly any reason to move on price. Lighter weight cows could become problematic without short term support from Asia and some people also expect that extra heavy bulls - which were one of the few categories that have risen significantly so far this year - might eventually see some correction. The rest of the market definitely seems in tact and only small price fluctuations can seriously be expected.