With the shipping times also being extended it seemed that Asian buyers were once again considering the European market as a potentially viable alternative. With the price levels we have now reached, negotiations are not easy and tanners are still trying to cast their nets below asking prices in the hope of finding a weak fish in them. However, with the limited availability of material they do not appear to have been very successful and in the end the currency market was again lending a helping hand to turn bids—with a great deal of effort—into some sort of acceptable price level. The key problem with many bids coming in is the extended terms a number of tanners in Asia are still looking for. Higher financing cost and the cost of hedging the currency have become quite expensive in the last year and, at the present price level, some inflate the price in dollars that buyers obviously find pretty difficult to understand.

However, the week finished with pretty high sales levels and prices that were at least steady and in some cases even slightly advanced in the end. While the focus in recent last weeks has been almost entirely on males and heifers, dairy cows made quite a strong comeback this week. With the sold forward position there was no major cause for concern, but cow sales had been poor since mid December. With this week’s round of selling, however, any concerns have been removed for the coming weeks. If there is any cloud in the sky for the market, it is only for those grades that had already outperformed last year. The extra heavy and top quality material are finding real market resistance, and the outcome of this battle is still undecided.

The situation for sellers that have fewer alternatives in the global market might be a bit more complicated. In Europe, discussions are becoming increasingly difficult. Tanners feel more and more lost in this market as they are forced to realise that, for the moment, their influence on raw material prices has faded. In this mood, discussions have at times become rough and cynical without changing anything and certain ‘trial and error’ activities from tanners aiming to influence the market in their favour have even added to the problems.

The kill: The kill has normalised to seasonal levels. The last cattle count has delivered a decline of approximately 2.5 % for 2006 and this should also be the pattern for 2007. Due to higher milk production per capita, the number of dairy cows declined more than males. The coming weeks will not bring many changes and, if there are any, they will not be on the upside. Carnival season is also approaching.

What do we expect: If there had still been any doubts about the market situation for the next six to eight weeks they were removed this week. There was enough activity for the standard items to secure the market within that time frame. The question is whether the € will benefit. With a firmer $ there might be a bit of space overseas, but in Europe prices will continue to face stiff resistance. 

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