There were very few surprises coming out of the late season international wild fur auctions. Most prices continued to tumble from the averages posted on the earlier offerings.
Overall, it appears prices across-the-board were down about 20 percent from the previous wild fur offerings. There were only a couple of bright spots. China’s renewed interest in otter — no doubt as a less expensive alternative to ranch mink — resulted in excellent clearance of this item. However, prices are a mere fraction of the average prices when the primary market was in Tibet. Evidently, China has resolved the CITIES issues.
Demand for muskrat appears to be holding at the newly established lower price levels. Understandably, China is the major taker. The less affluent consumers in that country view this article as an acceptable substitute for ranch mink. Sheared muskrat hats and scarfs were widely sought after gift items this winter.
The Chinese growing middle class’s desire for fur continues to be the driving force in the ranch mink offerings. All of the major international offerings have seen prices advance of about 20 percent from the lows of the prices posted on the opening sales. Exceptionally good clearance has been reported with the Chinese makers dominating all of the international auctions.
The U.S. dollar has been on a slowly spiraling downward trend against most major currencies for several months. Since most furs are traded internationally in U.S. dollars, some of these up-and-down price adjustments merely reflect the changes in the value of the U.S. dollar.
With crude oil prices seesawing around $70 per barrel, that too is difficult to calculate in that oil is also traded in U.S. dollars. The obvious question: Is oil headed up, or is the dollar merely falling?
Earlier economic analysts speculated that a Russian recovery would begin with $80 per barrel oil. When one considers the number of recent devaluations of the Russian ruble and the continuing decline of both the political climate and the economy, that prediction would appear to be way off-base.
Our wild fur markets are in direct relationship to the growth and prosperity of the middle and upper class Russian consumer. Our luxury wild fur items destined for the high fashion trade — sable (marten), fisher, lynx-cat and select beaver — seem to be moving well at these lower prices levels. For the super wealthy in Russia — and there are great many of them — there will likely be some real fur bargains next shopping season.
But, that too has created a social/economic/political problem. According to a post in Pravda, the official newspaper, disgruntled, destitute, out-of-work Russians have protested outside of lavish Moscow and Leningrad casinos. The target: the super wealthy in their Rolls-Royces, with ladies draped in full-length sable and men in their sheared beaver top coats. The Russian prime minister, Vladmir Putin, ordered the closing of casinos in all the major cites.
Many of our wild fur markets — raccoon, gray fox, red fox, all but the best coyote and the lower grades of bobcat and beaver — will not recover until these many economic issues in Russia are resolved. Though higher crude oil prices will no doubt help our fur markets, the flip-side will be greater production cost, which in turn would result in a smaller harvest.
Country fur buyers in the U.S. and Canada are keenly aware of this. Those that I have visited with find little to be optimistic about for the near future.
Understandably, the carryover of some large collections of middle and lower grade items are of concern. Our wild fur markets are controlled and driven by willing buyers of the lower grades and smaller sizes.
Most often, these lower priced furs are turned into hats, trim and garments for shoppers with modest means. These freshly minted members of the Russian middle class view furs as a symbol of their newly achieved status. It was these consumers who were driving the market in recent years.
Without a ready market for the lower grades, less desirable colors and smaller sizes, country fur buyers are faced with a dilemma: “Do I lower all of my ‘door prices’ in an effort of compensate for the loss on the low grades, or simply refuse to buy the low grades knowing it could be years before a market develops?”
The buyers of luxury merchandise will come back. With this recovery will come a market for our lower grades. When this will occur is a difficult call. A U.S. firm, Bain & Company, monitors luxury spending in Eastern and Western Europe and North America. Jewelry and furs are high on their “watch list.” The group predicts a full recovery will not occur until 2012. However, the group also expects luxury spent to shrink another 10 percent this year.
The Russian economy will, at some point, recover. Chinese merchants will continue to “dibble round the edges” of the wild fur market, taking fisher and marten at these reduced levels. Muskrats and now our otter are finding willing consumers in China. China certainly has its economic problems, but not to the extent of the rest of the world. It is still growing, simply not at the same incredible pace of a couple of years ago. Some analysts predict slightly less than 10 percent growth next year: Still remarkable.
Harvest size is always an interesting topic. Will we overproduce in a down market? Unlikely. Will the harvest fall to an all-time low? Not likely. There are simply too many factors. Higher unemployment will result in a harvest boost. Higher fuel prices will cut the size of the harvest. Weather is always a factor. Prices are also a factor, but not nearly to the extent of these other elements. Regardless, we each are embracing a tradition that is the foundation of this Great Nation. Let’s not forget that.
Market Briefs will return in October.