What happened this week: The last two weeks have felt like a summer party that came to an end this week. The US$ turned around and lost a fair part of its gains from the previous week and the question asked a week ago of whether the strong performance and interest could spill into this week can be answered with a clear ‘no’. It was not too surprising after the performance of the previous weeks and we have to admit that we prefer it this way. In our opinion another strong sales week would have created too high expectations for the market at too early a stage and a number of sellers had missed the high in August has already got too excited again.

If the market runs its usual course it will take well into September if not October to draw a real bottom line under the trend indications for the market for the rest of the year. Consequently, trading was far lower than in the weeks before and only some isolated sales were concluded. It  was not only a question of less interest, but also due to the fact that the demand is mainly for grades which are reasonably well sold and without taking an extended forward position not much material was available for sale anyway.

So, most interest was again focused on dairy cows and light weight dairy steers. European tanners slowly returned to their desks and a first round of sniffing and information calls was seen. With most sales in Europe being on a pretty regular and repetitive basis the standard buyers have covered their September needs already or will do it within their normal timing of purchases. So we are ending the summer holiday period in a pretty balanced market situation although we don’t know if this is actually the case for all sellers around Europe. Next week the south of the continent will return from their holidays and it will be quite interesting to see if generates any particular news for the market prior to the big get together in Shanghai the week after. Not only will it be interesting to see if the Italians are going to enter the market right after their reopening (unlikely), but also whether the market will have to deal with any kind of further payment problems (might still be too early) from that part of the world. If there is anything one can feel in the market presently, than it is a great deal of uncertainty and it is high time that the markets had some clear indications again on which to base fundamental decisions in the medium-term future.

From our standpoint anything could happen. Another round of purchasing and clear indications for another strong leather season would deliver substantial strength to the market as, with the present order books, many raw material sellers are holding. On the other hand we could see weakness if the purchases recently made by the Asian customer base were not backed by leather orders and if shipments are missed or slow. 

The kill: The kill is still bouncing up and down. This week is was a bit better again and reports cite better beef sales. However, nothing is stable yet and this could last for a while yet. Weights remain quite heavy for males and just about normal for cows.

What do we expect: We have low expectations for the weeks to come. The positive sense in the market has faded a bit during this week and the sharp fall of the US$ has also removed quite a bit of the market assistance seen in the last few weeks. So nothing is sorted out yet and it seems we need more patience after the summer break. Everything points to a steady to softer direction with little activity likely next week.

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