Fur Market Report: April-May 2007
By Parker Dozhier
The February international auctions offered mixed results. Clearances were
good for most articles, but averages were down on several items — in
some cases, substantially.
The trend was in line with major North American and Scandinavian ranch fur offerings and the corresponding retail movement of finished goods.
Mild winter weather has again dealt the fur trade this recent setback.
“Inventories are backing up,” reported a Moscow fur dealer. “Muskrat and beaver hats are not selling, and more are on the way.”
Typically buried under deep snow, Moscow citizens enjoyed near
50-degree days during most of December. According to the popular daily
newspaper, Moskovsky Komsomolets, Muscovites are smiling. They don’t
have to wear hats and the grass is green.
From our perspective, January was worse — a lot worse. This January, the average daily low was 40 degrees in the European parts of Russia, compared with a normal average daily low of 4 degrees.
It was mid-February before the temperature in Moscow dipped below zero, and then only briefly. By the first week in March, the temperature was in the high and mid-30s.
The Chinese newspaper, Xinhua, reported that Shanghai is enjoying the warmest winter since records were first taken in 1873.
Russian and Chinese fur makers monitor the weather along with the wholesale and retail movement of furs, and they know they are not running out of ranch mink and muskrat.
Greek makers are also keenly aware of the slow retail movement, but they were finally running out of raccoons. Thankfully, the Italians are using more raccoon fur for trim.
Bob McQuay, North American Fur Auctions spokesman, said furriers are taking a wait-and-see approach this year.
“At last February’s auction we had 58 Russian buyers, and they were all active,” he said. “This February, we had eight.”
A fur garment maker certainly does not need more raw materials if the finished products are not selling. Only about half of the usual number of Chinese buyers attended the February auctions. They can wait.
The furs are not going anywhere.
Trim articles such as coyote, ’cats, gray fox, marten, fisher, and to a lesser degree, raccoon are somewhat different than the short-hair furs, which are typically used in the construction of garments and hats. Long-hairs are doing extremely well.
Most fur-market observers agree Russia, Eastern Europe and China
have the desire for fur, but the immediate need is not strong, simply
because of the mild weather.
There has been considerable speculation that we harvested too many muskrats because of favorable prices last season.
“A lot of trappers chase the market,” McQuay said.
Sometimes, that works out well. Other times, it doesn’t.
But what is too many? Why did we have the buybacks and withdrawn lots of muskrats?
Auction officials have many balls in the air when they pick up that gavel. They are keenly aware of the market conditions, what like goods have been selling for, and most importantly, who is on the auction floor and who’s absent.
The auctioneers’ catalogues are marked using the most current information. A considerable amount of effort and research goes into estimating the potential value of a specific lot of fur. This predetermined evaluation is where the bidding starts.
For example, if a lot of XL, slight-damaged muskrats sold for $10 last season, but ranch mink have fallen 20 percent and clearances are down, it is likely the evaluation would be around $8. When the bidding starts, the auctioneer knows many of his primary muskrat buyers either are not there, or are not bidding. He opens the bidding at $7. He gets a bid of $5. With no more bids, he “buys back.”
The next lot is L, slight-damaged muskrats that have an estimated evaluation of $6. But the auctioneer got a bid for the lot above it for only $5. It is likely he will withdraw that lot and those following it.
While many trappers and fur buyers lament buybacks and withdrawn lots, claiming market crashes or overproduction, that is rarely the case. By not letting the fur go for a fire-sale price, auction houses are actually protecting the market.
The man holding the gavel is all that stands between trappers and the speculators whose only wish is to spend a little to make a lot.
After all, trappers and fur buyers entrust the auction house to get the best price possible when they consign their fur.
During the recent auctions, at least in the case of muskrats — which track along with the activity in the ranch mink markets — auction houses did exactly what was necessary to protect the market and their shippers. Had they not withdrawn a large number of the offerings, speculators would have moved in like a pack of wolves on a crippled moose.
Thirty years ago, I was on the floor of an auction house that is no longer in business during a major sale. Red fox were a hot item with the Italians. I fully expected to see record prices, but I was unaware of a problem. All the major Italian red fox buyers were attending a Scandinavian ranch sale on the same date.
A friend and colleague of mine jumped in the bidding and bought nearly a $100,000 worth of red fox at giveaway prices. At the time, I was still learning. Curious, I asked, “What are you going to do with them?”
Smiling shyly, he replied, “Put ’em on the next auction. Just watch.”
As I recall, he nearly doubled his money and never moved the skins from the auction house.
Things of that nature don’t happen in today’s marketing environment.
Don’t scoff at the auction houses for buybacks or withdrawn lots. They are attempting to make more money for you. You might have to wait to be paid, but the check will hopefully be worth the wait.
Trappers and fur buyers who bemoan the recent sales might not be so unhappy after the May auctions. Pleasant surprises are possible.
But then, there’s always the weather, lagging retail sales in Leningrad, the Shanghai stock market, the dalai lama mouthing off again, a sudden outbreak of the avian flu, corrupt politicians, foreign currency exchange rates and newly imposed tariffs.
Who said this job was simple?
Parker Dozhier’s entire fur market reports, including Market Briefs by species and Regional Price Quotes, are published in The Trapper & Predator Caller.