Projections Look Good for Fur

Parker Dozhier Market ReportFrankly, it’s somewhat dumbfounding why wild fur prices have not been rising by 10 percent or more a year.

When we look at the escalating ranch fur prices, the downward tailspin of the U.S. dollar against most currencies and the expanding market base, it becomes even more confounding. Furs are the ultimate free market raw material. Past prices have no relationship to what the offer will be today.

Simply stated: Raw fur is worth only what a willing buyer and willing seller will agree to. This is true whether dealing with your local fur buyer or selling on an international auction. While fur is often referred to as a commodity, nothing could be further removed from a true commodity than fur, except possibly
diamonds.

The U.S. dollar’s fall, among other factors, has resulted in a rush into the true commodities. As evidence by the commodities’ future markets during the last year: Cotton up more than 50 percent, pork bellies up 68 percent, coffee up 45 percent, and these are just a sample. Oil is a commodity that is said to be worth about $17 a barrel, but it has been bid up to $84 a barrel by willing buyers and sellers.

Yet, during the past few years, our raw wild fur prices have been ricocheting around like a bullet in a rock quarry. Muskrat prices hit record highs only to tank the following year. Gray foxes posted banner highs; now they’re hard to sell. Beavers have become problematic, with the castors oft en worth more than
the pelt. Marten, fishers and lynx-cats have seen ups and downs.

Short-term predictions of fur prices are hazardous to forecast. During the past few decades, I’ve made some good calls in this space. Don’t get me wrong. I’ve also made some unavoidably bad calls. Unseasonably mild winters, currency exchange rates (like when the Canadian dollar tanked in 1984), political upheavals (like the dustup over pale otter headed into Tibet) and styles falling out of fashion are only a few of the factors that dramatically impact short-term fur prices.

Yet, I’m still “bullish” on this season. You can bet it is not going to start out hot (understandably, country buyers are clueless as to what the future holds. We all are.) But, the potential for a strong close is looking increasingly better. Why? Well, a number of recent news stories point in that direction.

Of interest to marten, fishers and heavy lynx-cat trappers; the luxury markets are heating up, big time. According to a Wall Street Journal report, sales of luxury products are poised for a 10 percent increase this season. Unprepared for the surge, retailers of high-value goods in Europe, Russia and China are sighting shortages of goods.

If these projections hold, sales of luxury products — furs included among other items — will approach $250 billion this season. That’s a solid gain from last year. I suspect our marten, fishers and lynx-cats will ride in on this wave. “A rising tide raises all ships.”

Heavy raccoons, red foxes, wild mink and even pale, heavy coyotes and red foxes are also poised to see modest increases. Recent events in Russia certainly point toward more interest in our wild furs.

An early winter Russian-based fur fair at the Expocenter Fairgrounds reported more exhibitors and higher attendance this season. One item noted in the Sandy Parker Report indicated “good activity” in the skin dealer’s displays. This type of activity underscores an acute vendor shortage of retail furs. Skin dealers off er matched bundles of dressed furs ready to be turned into finished garments in a matter of days.

Skin dealers are (at least they once were) a vital link in the rapid fl ow of furs from producers, to maker, to retail furriers, to consumer. During the “Fur Boom” era, skin dealers fl ourished in the fur trade centers of North America and Western Europe. Dozens of these dealers were located in the New York fur district.

Thirty years ago it was a common sight to see racks of dressed skins being rolled down the streets between 29th and 32nd and Fift hand Seventh Avenue in New York. It was an excellent, highly effi cient system. A furrier in Dallas could have a customer wanting a particularly coat in a size or type of skin he
didn’t have in stock. He could simply call his resident buyer in New York and explain his needs, then tell his customer he could have the coat within a week.

For the most part, those days are gone in North America. However, it’s reassuring to see this segment of the fur trade is now flourishing in our expanding markets of Eastern Europe.

Hopefully, aggressive entrepreneurs in China will see the advantages of establishing this level of the fur trade. Higher crude oil prices are pumping
more money into the Russian economy. Retail sales are recovering, now all we need is a harsh winter. Not that it is any indication of what the weather will be like in December and January, but thus far the winter in Moscow and St. Petersburg has been early and harsh.

The economic expansion in China during the last 10 years has been incredible. Sales of high-fashion clothing, jewelry, furs, electronic gadgets and luxury cars have soared. China now boasts the second largest economy in the world, capturing the destination from Japan this year. Nowhere is this expansion more evident
than the fur trade. Chinese buyers dominate virtually every fur auction conducted. Fur dressing and manufacturing facilities are expanding. But, with rapid growth comes the fears of overcapacity or a market pullback.

This resulted in the Central Bank of China recently upping business interest rates in an eff ort to “cool-off” the rapid growth of the economy (nearly 10 percent per year). The increase was modest, around one half of one percent to 5.57 percent, and is not expected to impact the fur trade, either domestic or goods for export.

As recently mentioned in this space, retail fur and leather shops are opening at a record-breaking pace in the urban centers of China. Several are massive shopping malls. Early reports indicate shoppers are clamoring for these high-end luxury goods.

Responding to the growing consumer demand for fur, ranch mink production continues to increase. According to the International Fur Trade Federation, this year’s crop will be 50.5 million skins. Th is represents an increase of about 9 percent more than last season.

Yes. This season’s shaping up to look far better than earlier projections.

Don’t expect to see country buyers falling over each other to buy your catch. Th e market has developed late most seasons. This season most likely will not be an exception. Business people, particularly those in a trade as volatile as furs, are cautious. There are simply too many factors, many can occur within days, to risk a great deal of cash on an unknown future. We’re not selling soybeans.

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