What happened this week: Not much happened again this week, as has been the pattern over the summer months. The old story of no input and no output has been repeating itself. Once again, there would be much more market activity if the availability of hides was greater; there is still no lack of interest for August/September shipments.

Having already entered August, and production being sold more or less for the coming months, the focus of our interest is much more on what is going to happen in October. On a superficial level, everything is in order at the moment with hides being sold and more interest around. However, it is quite interesting that hardly any discussion with overseas buyers has occurred regarding October shipments. If leather business is so strong and orders are good for the second half of the year, why is the raw material supply not being secured now? One straightforward answer is that tanneries are simply not receiving the orders they were hoping for and are just keeping the ball rolling with longer lead times. Another explanation is that they are gambling again in the hope that the raw material market will eventually go their way, i.e. down.

As far as the hard facts of trading for the week are concerned, the little that was offered was once more snapped up at full asking prices. Tanners are still fighting long and hard for the penny but as long as asking prices are not raised steady levels can be achieved.
  

The kill: It seems that the worst is behind in our area at least. Temperatures have normalised and the peak holiday season is behind us so the kill increased again. It is still short of normal levels but better than nothing; we need another 20% increase to reach normal and workable levels. Hopefully, production should now gradually rise in the coming weeks.
 

What do we expect: The market continues to depend on the movements of Asian buyers. With other markets showing little signs of tiring, it seems that at steady prices all desired product can be sold in the coming weeks. Currency and other non product related issues remain in the foreground up to October at least when net returns are calculated. We might see another breaking point after the second half August leading up to APLF.