This is an excerpt from Trapper & Predator Caller‘s June-July 2014 Fur Market Report.
By Serge Lariviére
Let’s face it: We are on a down wave in the fur market.
On the radar? Expect further decline in pelt prices with steeper declines for marginal quality fur. If you have inventory, do not delay because it is unlikely to get better anytime soon, at least not until things start getting cold again. At this point, sell what you can, take what you can get and hope things get cold early next year so that the unsold fur from this year can get off the shelves to make room for fresh goods.
Interestingly, fur markets in the United States and Canada climbed, thanks in part to our brutally long and cold winter.
By the time you read this, many other sales will have happened. At the time of this writing, North American Fur Auctions is gearing up for its May sale to be held May 14 to 21. On June 1 and 2, FHA will have another sale in Helsinkin with Saga Fur and American Legend. Then, on June 21, FHA will host another sale for selected items at their home base in North Bay, Ontario.
All of these sales will be important and interesting to follow since the previously unsold inventory will likely be released at current market value. To be honest, no one is overly optimistic about any of these sales, and most hopes are geared at clearing up the large offering so that there is as little carryover into the next fur season as possible.
By now, the reduced prices are known and accepted, and many of the large buyers are taking advantage of these reduced prices to “average down” the inventory still in hand by retailers. For example, in a garment made of ranch mink, it is estimated that 75 to 85 percent of the garment’s final cost is the price of skins and dressing with the rest being labour. When prices climb, retailers can up their prices and profit margins because the skins cost little compared to retail value, but on a downward market, customers expect price reduction yet the skins in the garment were purchased at the previous high level — a very difficult challenge for retailers. Some retailers have even claimed that this year will be a no profit year for them because of this situation. So by purchasing some lower priced skins, the overall average of the skins will be reduced, enabling them to lessen the financial blow.
There is no sugar coating this: The market is softening up, and prices likely will continue to drop. If you have goods, sell them now, as things will likely not get better for a while. Some already predict that 2015 will be even more difficult. The best we can hope for now is that next fur sales move the skins out, and that China and Russia are hit with an early winter next year.
Some auction companies are seeking new markets to try and lessen the dependency on China and Russia. Some others in the industry believe that this is the beginning of the end for the Chinese “fur bubble,” predicting that some of the emerging retail outlets freshly established in China might not survive with their huge inventories of unsold high-priced garments made of high-priced skins when a wave of lower priced skins suddenly enter the arena. Some even think the impact might affect the Chinese production of ranch mink, as the reduced prices will make it a lot less lucrative than it was a year ago. At this point, all these speculations remain just that — speculations — but what lies ahead is certainly not as brightly positive as things were a year ago.