What happened this week: The holidays are slowly but surely coming to an end and the Olympics are now over. There is now significantly more email traffic and phone calls from people returning to their desks have increased as everyone tries to figure out where we stand. We are still at the same stage we were at before the holidays except that the US$ is a bit firmer; however, a bit of the shine faded in the second half of the week.

Geopolitical issues have pushed commodities higher again and the US$ is now lower. Conflict between the big blocs, namely Russia and America, about the situation in the Caucasus has led to what could be described as a return to the cold war. However, Russian wallets are better filled these days, while the Americans pockets are a little emptier than they were 40 or 50 years ago.

Unlike the global crises in the 1950s and 60s, hides as a commodity are not gaining in price, but are actually suffering. In Europe, people are still easy about the situation and were even weighing on the greenback and not on the euro. As far as the hide business is concerned, it was pretty quiet until mid-week, but from Wednesday on a bit more activity from Asia was seen again. This was not broad-based, but some individual players might have felt that hide prices have become pretty attractive and that it might be not be a bad idea to book some hides.

Bids were very ambitious and the falling US$ from Wednesday made negotiations pretty difficult. But in the end a decent number of hides was moved, although opinions over prices vary. Those that think the market has bottomed already and that Asia will return to the market after the Olympics may have turned orders down, but for those that feel the problems could persist for a while it was at least a chance to get some contracts in the books for September.

Cows were on the shopping list for the first time in a long while. However, as we have long been anticipating, demand did not come from the standard upholstery buyers, but from side leather tanners who had the courage to take a chunk and added a decent volume of low grades again. The interest for bull hides that we saw some weeks has not been followed up and it seems that the big players in China were simply filling their inventories before receiving their standard supplies from the USA during their Asian trips.  

Business in Europe has still mainly been related to normal programme buyers. Almost everyone is now on high alert as Italian tanners, from whom most people expect the biggest problems, are coming back from their holidays. There are still quite a lot of payments that need to be cleared before the holidays. Money or no money, that is now the question and, by mid September, we should know whether the expected failures will really happen or not.

The kill: The kill is slowly recovering, but the slaughter mix is not what it should be. Cows are far more plentiful than they should be and bulls are not what one would like. The kill is still too early for heavy cows, but lower milk prices might now show their effects.

What we expect: Business is likely to be rather coincidental next week as most buyers and sellers are likely to wait until after ACLE. Many changes in the market will be currency-related until then or driven by individuals making early decisions.

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