What happened this week: If people are looking for some kind of excitement, now is a great time either to be involved in the financial sector or to be trading in raw materials. The hide and skin business is currently one of the most challenging and exciting businesses to be in.

Most of the interest and attention was again paid to the financial markets this week, which took another rough beating. Stock markets tumbled as did energy and other commodity prices. Most of the price rises seen over the last two years have been wiped out in a matter of weeks.

If anything good is to be taken out of the situation, it is that being a European exporter is now a positive, having been a bad position for some time. The US$ lost almost seven cents in a week, equivalent to approximately 5%. Fighting for cents and fractions of cents is becoming more important by the day, particularly in the hide and skin market.

The hide market is still experiencing difficult times. The tanning industry is suffering the same problems as anyone else and only a few players still have the courage to take chances they are offered at the moment. The biggest obstacle is obviously the cash flow situation.

However, European hides look pretty attractive to a lot of overseas tanners. The dollar situation is making prices more competitive by the day and the trend among overseas tanners to look for better quality raw material is adding further benefit. However, this is not across the board as it still mainly applies to raw materials suitable either for shoe uppers or accessories.

Since the US market is still reluctant to adjust to the present market levels it is fairly easy for quality suppliers from Europe to find buyers these days and if demand is not for the calf skins, which have been popular for a while, it is for ox/heifers and full hides.

The upholstery business, and particularly cowhides, remains in the doldrums. Everyone in this sector is now waiting for the results from the upholstery fair in Highpoint, USA, and is hoping that US consumption will not be as paralysed as it appears today. As things stand, it would be unrealistic to expect any positive news from that part of the world.

Tax fraud investigations in northern Italy are not helping this sector either. Overseas interest for males of between 20 and 40 kg was still good enough to absorb a reasonable amount of material while extra heavy bulls are still suffering as a result of the situation in the automotive industry.

Cowhides were again the difficult part of the business and even the significant tailwinds from the currency market did not generate any significant support to sales. It was only enough to find some very sporadic buyers this week. However, in US$ terms we are now reaching levels close to the historical lows and it is interesting to see whether this might attract a few more long-term buyers soon. As far as prices were concerned the currency market was supportive but, despite the sharp gain, was not enough to stop the downward pressure. At best prices were stable or moderately lower this week.

The kill: The kill remains at seasonally high levels. With the weather getting cooler and wetter, farmers will take cattle off the fields and the kill is expected to remain high.

What we expect: Without any settlement in the financial markets it is unlikely confidence will return. Further indications will be gained from the shows in Highpoint and in Bologna, and this will show whether prices have fallen enough to attract enough buyers to stabilise the market. We are still pretty doubtful regarding cows, but for the rest of the market it will definitely depend on the development of the US$.

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