What happened this week: Week by week it is getting more difficult to trace the market realities. The mood of the vast majority of the trade is still pretty depressed and there has been little change.
Further isolated salted stocks of suspicious materials and origins are still looking for buyers (which they still haven’t found yet) but apart from that we had a pretty regular sales week with a decent round of business in overseas markets. At the end of the day it’s not been easy to agree on prices, but the final selling prices are close to our market ideas, but far away from the levels quoted in some other reports and in the gossip circulating the market. This is — as is frequently the case in such market conditions — a case of Chinese whispers where a rumour is started in one place and is then mutated and circulated endless times before it comes back around again as brand new information. As far as we are concerned the market is operating on two levels at the moment. One is the daily reality, with trading between operating units; the other is the ‘yellow press’ of the trade in combination with two-tier supplies from various sources, which traditionally only find homes for their products in a seller’s market. This also explains the extreme spread of prices which are still swirling around in the market place.
The volume of interest this week was significantly higher than in any other week since the Bologna Fair. The market has found a bottom and what is far more interesting is the fact that, despite all the troubles over the last few weeks, shipments have never been delayed and L/Cs are still coming in accordance with the contracted shipping plans. This is even more important as we only have five or six weeks left before we have to cope with the production break in China for the Chinese New Year holidays.
Most of the interest this week was once again for dairy cows and heifers from overseas and fresh bulls n Europe. The salted stocks which have built up in some places are only attracting bids from the aggressive and well-known bargain hunters in the tanning industry and they are teasing the nervous suppliers with bids which are 10% or more below the present market levels. Volumes and regular contracts are not being signed at these levels, but isolated small quantities are changing hands, mainly because some of the smaller suppliers are in desperate need of cash to meet their immediate financial commitments. However, the final answer about the value of these cheap lots will be given when the hides are tanned. So far both parties are happy as one has the cash they need and the other has a bargain with which to level his average purchasing prices down. This applies in particular to male hides while cows at discount prices are not really circulating much.
So, by the end the week it was confirmed that the price correction that was so desperately needed had taken place. Leather demand still remains in place with the inner circle of producers, while the ‘fly-by-nights’ of the pipeline are suffering and have been temporarily catapulted from the carousel — at least until they have tidied up their accounts — and will try to get back on it when the market turns. 
The kill: We saw an early winter and so cattle is constantly being supplied to the slaughterhouses. Good numbers, but nothing sensational.
What do we expect: We think the dust is now starting to settle. Earlier for the regulars and later for the non-regulars. It will still take a few weeks until this has penetrated the trade and some will have to bite the bullet and accept their losses. We don’t expect prices to really turn around anytime before 2008, but the massive corrective price pressure should now start to slowly fade. We are a bit worried about the influence of the rail workers’ strike in logistics and hope it will not affect scheduled shipments or that the financial market will produce any new shocks.

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