What happened this week: The market this week started with a sort of ‘big bang’ with the news of an outbreak of ‘Blue Tongue’ disease in Holland and the border regions of Belgium and Germany. Since the leather business has become pretty sensitive to any outbreak of disease there was a great deal of excitement over this.  However, in the end, the panic cooled down very quickly and by the end of the week, it was hardly an issue worthy of discussing. The critical question, however, still remains unanswered… How are the authorities in the export markets going to react to certificates issued from Europe? These authorities can no longer sign health certificates stating that the exporting country has been free of Blue Tongue disease for the last two years. However, the disease is pretty widespread in Africa and Asia, and is harmless to humans. As it can only be transferred from and to live animals by mosquitoes, there is little reason to restrict the movement of hide and skins, and, so far, no authority in any country has restricted or banned the import of Northern European hides.

The trade reacted in its usual sensitive way and so the first days of the week were spent busily talking to customers and authorities on how the present situation should be handled. By the end of the week most decisions had been made and the final conclusion was that the export health certificate will no longer contain Blue Tongue disease. As no importers have been advised by their local authorities that the import of hides and skins will be restricted, shipments were resumed quickly and were running at almost normal levels again as we write this.  This applied, in particular, to direct business with tanners although export traders remain a bit more cautious and are trying to wait a few days as they don't want to have to sit with material on the boat to find out that they might not be able to clear it at the destination.

Consequently, business was a bit slower at the beginning of the week and Asian customers were not really willing to negotiate business prior to the Shanghai fair and the settlement of the import question. But with a generally firm undertone in the market interest remained intact and there was no sign of tanners staying out of the market or refraining from purchasing further raw material. In Europe interest was significantly better. Due to the low kill in the south some buyers did not get what they planned and so they had to shift some short-term interest to origins where they can obtain enough supply. This was quite handy as with a better kill this kept the product flow well intact. Prices remained in their narrow frame, as the Asian buyers are not willing to lift their ideas and, quite the reverse, they are even trying lower bids. Prices with the available customer base in Europe increased fractionally; however, overall the variations were negligible.

The kill: The kill continues to return to normal levels. In our area the holidays are already over and we are now entering the high season again. With the 7.7% increase in slaughter in the first half of the year it is now going to be interesting to see whether the supply of live cattle will remain sufficient in the second half. For the moment we think that the kill will remain normal and hope that weights are going to rise as they are still pretty low for the time of the year.

What do we expect: It is hard to expect next week to bring any big change. Italy will start to return from holiday and Asia is preparing for the fair and visits from suppliers. The week after might give more of an indication and see more volatility. The market remains fundamentally in good shape, but one still fails to find any argument for a strong move on either side and new major trends cannot really be determined yet.