What happened this week: This week was extremely quiet as far as general trading activity was concerned, just as everybody had been expecting. Behind closed doors, sellers who are not yet sufficiently well covered in terms of sales quietly tried to find buyers to cover their positions up to the end of June and this is obviously not an easy job. Most buyers, particularly in Europe, are not rushing to buy or to commit for more than hand-to-mouth, and are also favouring their regular suppliers in the first instance, which seems to be enough to cover tanners’ needs at present.

This is still not enough to clear product in the difficult grades, such as extra heavy cows and bulls. However, the pressure is certainly easing a little now due to the falling kill. Current production is certainly not piling up additional stocks, but the existing ones do not appear to be moving easily at the moment. The May/June period—another low kill period—will be of great assistance in terms of creating additional demand which is not being covered by the regular fresh, chilled hide supplies. Asia, the ‘helping hand’ and absorber of available hides in recent months has still been buying the weight ranges up to 40 kilograms, but the sharp decline of the $ during the week has again made calculations rather difficult and, despite the fundamental interest and regular sales, € revenues are not supporting the price levels either. So, in general, sales activity for the medium weight ranges is still enough to keep positions clean, but revenues are slowly descending due to the currency changes. This does not apply to the heavy upholstery hides where the unsold position continues and looks set to weigh on the market for some time. Meanwhile, abattoir prices for April were fixed, finding only a very modest downward adjustment which does not compensate for the decline in revenues at all and certainly not for the decline in hide weights.

Surprisingly, Asian buyers have shifted a bit from the shoe upper hides towards the dairy cow section. Although we are not too positive about the upholstery business, Asian buyers are now more interested in average quality cows and it seems that the attempt to push the US steer market lower is now starting to spill over into the European business. Side leather tanners have reduced their activity in our area. Prices were approximately steady again this week with the exception of the revenue losses due to the weak $. However, the net variation of prices remains in pretty narrow ranges and the market has not yet seen any substantial decline. The recent rise of the € may increase the pressure on the European market in the coming weeks.

The next insight we have will come from Lineapelle in Bologna where a better picture of the Italian tanning industry is likely to be obtained. We are now in the second quarter and this means we are running into the slow season in Europe so little short-term support can be expected.

The kill: No positive news. The Easter weeks have reduced the numbers again and the kill can only be described as lousy. The February slaughter was down by 2.1% compared with last February. The most interesting development was the 5.8% decline in the cow slaughter and the 1.6% rise on bulls. Numbers in the coming weeks should be a little better, but will still not be exciting.

What do we expect: We wonder if there is anything that could change the present slow mode. The imbalances are still not strong enough to push the market hard and so it appears likely that the market will continue to face headwinds and that currency will continue to weigh on revenues but will still not develop real downward potential for the moment.

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