What happened this week: To some extent, we could have copied last week’s report into this one. Activity in Europe is slowing down each day and those who are not already on holiday are definitely preparing for the holiday period. Football is not even an issue now that the World Cup is over, the phone rings much less, staff levels are reduced, the sun is shining and the kill is low – summer is setting in.

There is a slight difference compared with last week. Asian buyers seem to have been eagerly awaiting the present situation, expecting that suppliers would be desperate to move production between now and the close of the holiday season at the end of August. So, the number of bids coming in is constantly increasing. This week there was much less interest from tanners, which we had already seen last week, but traders are much more obviously searching the market for a group of tanners from China. This group is sticking to tradition and not buying directly from the source, but using export traders to compose specific orders with set price targets.

With the more pessimistic reports coming in from the United States, many were optimistic about finding ready sellers with enough inventory and production in hand to negotiate. The surprise was that they didn't find too many suppliers in continental Europe who were actually waiting for the buyers. Indeed, the very reverse was true, many came to realise that a fair number of sources had already done their homework and did not have any significant offers to make. So it was not so easy to get the orders covered and we would be surprised if larger businesses could have been concluded during this week. This is less as a result of insufficient prices and much more due to insufficient availability.

None of this would come as a surprise if European hides were actually looking really cheap or if other hide markets in the world would go up in price. Trusting the reports you get from other parts of the world, the opposite appears more accurate and this makes it even more interesting as to why so many tanners have directed their purchasing activities towards continental Europe. Either the other markets are not as depressed as we are being led to believe or the demand for specific leather types simply makes it necessary to buy hides in our part of the world. Ultimately, it was another week with a decent round of buying and not only for dairy cows, which are the standard product, but heifers and lighter weight bullhides were also in constant demand from the Asian tanning industry.

It still had very little impact on prices. Trying to push asking levels too high is killing the interest, but whenever aggressive bids were refused, buyers were eventually willing to pay asking prices or close to them. However, one thing is pretty clear, hardly any significant mid-summer season market pressure will occur in 2006. Significant need-to-sell cannot really arise anymore as most productions look pretty much cleaned up until the end of the holiday season. Shanghai in the first week of September should be quite interesting to fully understand how well buyers are positioned into the third quarter.

The kill: In our region it can only be called the lowest of the low. Holidays, hot weather, poor beef business and so on, are leading to very low incoming numbers.

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