So, the little activity that was seen was entirely in the hands of overseas customers and, surprisingly, the offers made between Christmas and New Year received some feedback and some sales were even generated. Since there were pretty few hides to offer, and even those were mainly low grades and specialties, the volume and importance of the deals was limited. However, it was a surprise because no one was expecting anybody to buy raw materials, not even the Asians. Maybe the argument was that the hides were still ready to ship in January. And perhaps those who believe that there is still some open-to-buy for the short-term are right. So, all the interest seen was either for reasonably priced male hides (of which hardly any were available) or for low grades which were readily absorbed at full asking prices.

Although some of the reports from across the Atlantic are still finding good demand for cows from the upholstery sector, we cannot share the experience and our regular customer base in China also remained very quiet for dairy cows over the past couple of weeks. Fortunately, some shoe tanners have discovered cows as an alternative and so some of the reduced volumes from the standard customer base have been shifted to a new clientele even though trust in the sustainability of the new outlet is limited. So, everything has remained pretty much the same and with the low kill in recent weeks, supply management of the existing contracts and end-of-year operations are dominating the day-to-day work.

No matter how activity progresses, there is very little indication of a change in the near future. Most productions hold a full order book and the present production of hides will be easily absorbed without any additional activity. If there is a question over anything it is probably still over dairy cows, for which upholstery tanners in both Italy and Asia seem reluctant about the price level and the product itself. So far the free availabilities have been absorbed by other sectors, such as shoes, leathergoods, automotive and vegetable tanning, but we will have to wait until the end of the month to see whether the volumes can all be placed without the standard buyers at the present price levels.

The kill: From the Tuesday before Christmas the kill has diminished and it has been very low over the festive season. The New Year also started with low numbers and the first real day of recovery was seen on Friday this week. With the higher kill in 2006, many are now expecting a sharper decline in 2007, mainly due to the lack of animals. 

What do we expect: The next weeks will be difficult and once again the trade must get used to the problems associated with raw material supply. European tanners are starting the New Year with a high raw material price level and a weak $. Budgets and calculations are looking very different compared with the ones we saw a year ago. While the tanners think this must be solved through raw material prices, the kill and the global market are still against them.

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