What happened this week: It seems that the market has been acting a little like a sleeping dragon. While sleeping, one dares to move a little closer everyday and our confidence and courage rise with every little step as long as nothing happens. However, as something wakes the beast, you have to run for your life. Although some remain shy and stay further away considering the risk, there are always others who get too close and could become easy victims if they are not fast enough. Those who have to run are hunted down whilst the others have probably had enough time to hide away and let the dragon pass. This is a little like the hide market at present. Some seem to be the hunted species and they are really being pushed hard.

This applies in general for origins and suppliers that are mainly oriented towards the Italian market. With the summer holidays approaching and a weaker market, it appears all of the bad habits have resurfaced. Apart from claims of better deals elsewhere, there has also been an aggressive depression of the market through lowering daily bids and new reports virtually every hour of somebody, somewhere selling cheaper and at levels which are anybody’s guess. As far as we are concerned we think that the market or—better put—some players are exaggerating the situation.

The market had to correct because raw material prices had been pushed too hard and too far. This also happened for the overvalued hides and since one can’t really detect any significant reduction in global leather demand there is also no reason why lower raw material prices would or should stimulate leather business any further. As far as business is concerned, you have those who talk and those who act. Those who act don’t get irritated by those who talk and act rationally. Where prices are right and fit in with today’s leather prices they are not shy and are willing to buy their regular programmes and volumes without much discussion for August and, in many cases, already into September.

The main interest this week was focused on dairy cows and while the Italians spent their time trying to take advantage of the situation, the oriental buyers were bidding and buying and even some lighter weight bulls found homes this week. Prices were almost stable with only the strong euro hurting calculations not the volume of interest and sales. At the end of the day it just means that the market now needs to reflect the realistic situation at the abattoirs and it could stabilise quickly and allow everyone to relax for the rest of the summer. Sales were at reasonable if not even quite good volumes for the time of the year and they were almost exclusively to the Orient although some did go to regular Northern European clients. As mentioned above, prices were steady and moderately lower levels for most grades. However, the storm is not yet over, because there are still players desperately looking for a sale or better short-term shipments, but the market has neither come to a standstill nor there has been any sign of a sharp decline in the fundamental interest for hides.

The kill: Remained the same as the country is slowly but surely entering into the full swing of the holiday season. Beef business is not said to be too good and so anything else but a reduction in the coming weeks would be a surprise.

What do we expect: To us it seems that the worst is over for standard items. We are now in the holiday season and not much is going to happen, but the massive pressure on this market seems to be slowly lifting and it will completely disappear when more begin to believe this and the ‘emergency loads’ are cleared. Trading activity in Europe is now drying up due to the holidays so we don’t expect many changes in the short-term.

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