What happened this week: Things were moderately slowing down this week, but the stress did not diminish. The continuing flow of bad news from many industries and economies is not loosening its grip on the hide market and a few sellers are still panicking. These days, throwing a rumour into the market is enough to scare suppliers and some still believe that falling prices are actually stimulating demand.

So, again a few cheap sales from various origins were reported, but they were not really confirmed by reliable sources. Some of them, however, have been knocking around for a few weeks already and cannot be considered either new or reliable at all. This gives us the impression that there is actually much less news available, as many players are so caught up in their depression that anything is being used to confirm it.

There is no question that the leather sector is still in a pretty difficult condition. Production hasn’t collapsed by 50% or more, but this is what the market reflects these days. In addition to the negative news during this week we also had to digest the news that the largest Scandinavian tanner was in trouble, but is at least intending to continue production after some serious restructuring. Since people are busy dealing with the bad news, better news is simply being ignored. The week has delivered a large round of interest and even sales in the end. Interest was shown across the board, from all markets and for all grades.

Bids at the beginning were pretty ambitious and, since we are not offering the cheapest hides around, it was not so easy to explain to tanners that not every bid is going to be accepted these days. In some cases it took up to three days before buyers believed we were serious, and finally a decent amount of business was concluded. The unfortunate result of this delay was that the US$ took a decent nosedive this week, which made negotiations more complicated. In the end it was pretty clear that tanners considered it appropriate to buy some stock even when it was not the cheapest offer in town, but was coming from a trustworthy supplier.

However, with the fundamental price levels we have reached and the small price difference between the various origins, the last few percent isn’t really making much difference today. From the reports we got and saw from other origins this week it seemed to be the same situation in many places. It is certainly too early to celebrate the end of the decline, but at least it has lifted quite a bit of the pressure from the market. Prices were close to market levels and were only negatively influenced by the weaker US$ here and there. 

The kill: The kill was still pretty good and this might continue until the middle of next week. Weights are now better and are reaching the levels we expect for this time of the year. Slaughter statistics show a higher kill for the year until October, particularly for cows which are up 5%. This doesn’t give much hope for the kill in 2009.

What we expect: With the decent move of hides this week and the declining kill for the coming weeks, some of the pressure has gone and might also lead to a ground in the market, which we believe everyone is looking for. Hopefully we may see some ‘afterburner’ next week, which would lead to stability until reopening in 2009 when we should know about the next trend.

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