We have hesitated to write a market report for some time. The market has drifted sideways for basically a year. Small increases in prices appeared and disappeared in several species. The market is still dominated by an oversupply of ranch mink. Future prices will continue to be affected by mink production, Russia and Chinese mink demand.
US and European mink production has remained fairly stable throughout this three year downturn in prices. Some smaller ranches have liquidated, but larger ranches have remained and in some cases increased production. Previous year’s record profits have insulated these producers from today’s low prices. However, this cannot continue forever. Many ranchers are below break-even levels and this may result in some liquidation. We have heard of very little liquidation or pelting out. This does not mean it is not happening. Any meaningful herd reduction will become apparent in late October.
Chinese production has decreased substantially in this period. This is a positive and actually was apparent this year as commercial Chinese supplies were at times considered tight. The down side is most liquidation occurred in the more commercial types where ranch liquidity was already sparse. Therefore, the remaining ranchers raise a better mink and are typically better financed. This will make further liquidations unlikely. In addition, these ranchers do not have to deal with import taxes, which in affect adds several dollars to their average selling price.
Russia is a wild card in the wild fur market. Their devalued Ruble has been a double edged sword. It’s plummeting value three years ago wrecked the American wild fur market. However, the plummeting Ruble has served its purpose by making Russian products cheaper than their competitors. This has slowly improved their economy. Jobs have been created and many sectors are doing quite well. Russian fur demand was up significantly last year. However it was nowhere near levels of a few years ago. I am optimistic this trend will continue. A doubling of this demand is not too optimistic. This would still be way below previous levels and leave room for improvement. Price increases from this demand are difficult with ranch mink prices so cheap.
Chinese demand was definitely curtailed last year. Positioning of the Chinese New Year resulted in far fewer selling days. This will not happen this year as it is a month later. This will definitely be a positive.
Traditional full length mink coats have fallen out of favor with style conscious Chinese and Koreans. Popular garments take far fewer mink skins. This is obviously a negative and will most assuredly continue. Hopefully more coats will be consumed at the cheaper price points of these garments.
World ranch mink production, Russia and Chinese demand for mink hold the keys to the wild fur market. Unfortunately we are held hostage by ranch mink which is beyond our control. Reduced wild fur production alone cannot correct our situation.