Market Slide Another Chapter in Familiar Story

GENERAL OUTLOOK

The recent downturn in the wild fur markets has proven to be a painful experience for many. This is particularly true for those newcomers who have been watching our markets slowly improve during the past 10 years.

Certainly, it has not always been smooth sailing through the period. Otter markets took a major downturn due to political/cultural events in China. Muskrat markets came on strong, then crashed, only to see a resurgence.

For those of us involved in the fur trade for several decades, it’s simply another chapter in all too familiar story. We have seen this movie before.

On a bleak Monday morning in October 1987, when stock markets around the world collapsed like a house of cards, our fur markets were dissolved in the tidal wave sweeping through all of the luxury trades from diamonds to yachts.

In the ’70s and early ’80s, full length fur coats, made from lightweight southern and semi-heavy raccoon, were a popular fashion item in Germany and Italy. On the ski slopes of North America and Europe, you would see a parade of red, silver and arctic fox, lynx ’cat, and coyote parkas and jackets. Long-haired furs were the rage.

The trim and accessory markets were equally as hot. Our annual harvest of wild mink, marten and gray fox seldom fully met the trim demands in Germany and Italy.

High fashion houses in Japan gobbled up our better heavy lynx and select marten.

Korea slowly moved from producers of shoes and clothing into makers of leather and fur garments during this period. However, it was not until after the hosting the Olympics that fur garments became available to Korean consumers.

It was a slow, and often painful, recovery.

Fashions change. New markets must become established.

It was not until the break-up of the former Soviet Union before imported furs became available to Russian shoppers. That market begin to grow. Then in 1998, Russia felt the pain of its first currency/banking crisis. Our raccoon markets suffered along with the Russian ruble.

However, the 1987 downturn was across-the-board. Ranch mink were not immune then as they appear to be now.

Late-season ranch mink and fox auctions saw a replay of previous offerings. Buyers from the Far East, principally China, dominated the auction floor. The five million mink were virtually all sold at prices about 40 percent below the record-setting prices of last season.

Now that South Korea has regained some strength, high fashion Korean makers moved into the market, taking some of the top lots of females.

Ranch fox were a different story and might give us some hint as to the anticipated movement of our wild furs in the weeks and months ahead.

Typically, Russian, Turkish, Italian and Greek makers have been active takers of ranch fox as well as our gray and red fox, trim coyote, raccoon and other articles destined for trim usage. Ranch fox was highly desirable item in the trim trade. Most of the finished goods were intended for export into the growing Russian market. This season the Scandinavian ranch fox offerings have gone virtually unsold.

While the ranch mink activity reflects the growing consumer demand for fur in China, the downturn of our wild fur markets as well as the ranch fox activity illustrate the market’s dependency on the Russian economy.

It is difficult to find reason for optimism in light of the situation in Russia. The Russian ruble has been devalued six times in recent months. This economic meltdown is causing a spike in unemployment and spreading poverty. The World Bank predicts the Russian economy will shrink 4.5 percent this year and continue to retract until crude oil prices began to climb. Credit is becoming increasingly difficult to obtain. Shortages of necessities are becoming commonplace.
The unsold wild furs, plus a carryover of ranch fox is expected to result in a glut of various raw trim material available next season. It is rapidly becoming a “buyers market.”

While it is merely a guess at this time of the year, next season we will likely see the better beaver, marten and heavy north central raccoon in the larger sizes selling at levels near the close of this season. The better lynx ’cats and fisher should sell at this season’s level or slightly lower.

Remember, the total harvest of these select goods coming available each season is typically limited when compared with the number of smaller sizes and lower grades.

Ordinary coyote, coat-type raccoon, red fox and the lower grades of bobcat will likely be difficult to move. History tells us that the weaker the markets, the tighter the grade.

Chinese buyers are expected to continue taking muskrats, but might rethink what they are willing to pay. Wild mink just might find a few more interested buyers, but at the price we are now seeing.

This current economic shakeout that most of the world is enduring is not projected to see any substantial recovery until the second quarter of 2010. The Russian situation could likely take longer. Who knows the price of oil a year or two from now?

This is not the case in China where the Central Bank is projecting economic expansion slowing from 10 percent to 12 percent annually to only 2 percent this year.

One thing is certain: There are people in Russia who want our wild furs and when they can afford them, we’ll be ready.

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