What happened this week: This week’s trends were rather mixed. We were surprised by the amount of interest in dairy cows. In particular, the regular buyers from China were actively bidding and, despite the negative trend of the $, some business was even concluded at absolutely steady price levels. Of course, the weaker $ had a negative impact on € revenues but, at the end of the day, this was far less than one would have expected in view of the general price trend seen over the past weeks.

The European business was limited to some renewals of regular programmes. These discussions have been extremely difficult because tanners had pretty ambitious price ideas when it came to the heavyweights. It took quite a long time to find agreements that were fitting with the market realities. Lighter weight bull hides had an easier time and price discussions were nowhere near as complicated as for the heavier material. With the easier trend for American hides, the interest for bulls and ox/heifers from the Far East continues to diminish. Adding up the sales on Friday afternoon, numbers were definitely better than one would have expected at the end of last week. Maybe this is also linked to the reduced availabilities and inventory looking for homes. All in all, the situation is somewhat better than the mood. Having said this, we are lucky that the demand is not high at the moment because, except for the earlier headaches for the extra heavy hides, all other categories are still finding enough buyers to keep production cleaned up.

It is still pretty difficult to draw a clear conclusion from the situation. It seems, however, that the strong performance of international stock markets and the good news from most consumer markets around the globe have evaporated a lot of the concerns many people in the trade still had some weeks ago. Only the weak $, the unclear situation with US economy and insufficient profitability in the tanning industry could be considered as negative factors in the present market equation. We have to admit that, for us, the decent demand for dairy cows was the biggest surprise during the week. We have been reasonably negative about the upholstery market and pretty positive for the side leather business, but business interest over the last two weeks has reflected the exact opposite. It is probably too early to judge whether this is a fundamental shift or just a temporary situation reflecting some seasonal influences. In general, one could say that the market performance for standard and regular material is better than people—including ourselves—had expected.

The kill: The kill eased off again this week and average weights continued their steep seasonal fall at the moment, most likely supported by the very warm spring weather this year. The dry weather conditions are preventing the grass from growing properly despite the above average temperatures. Next week will be shortened due to the May Day holiday and the kill will be low. Abattoir prices for May have to be adjusted again to compensate for the lower weights.

What do we expect: We have to alter our fully negative sentiment from last week a little as the market holds better than we expected. However, market activity will slow down again next week due to the holidays almost everywhere across the globe. So, activity should be next-to-nothing and price movements, if there are any, should be limited to currency fluctuations. In the end, it we will be driven by the next moves overseas as there is not enough dynamic in the market to move it independently.

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