China a major player anytime fur demand wanes
Springfield — Illinois trappers who plan to sell pelts this season are typically at the mercy of the world market, which means China and Russia, mostly.
China is the largest single user of wild fur – or any fur for that matter. The Chinese prefer short nap fur such as mink, muskrat and otter.
It is impossible to discuss fur and China without talking mink. And it is impossible to speak of mink without exploring the impact ranch fur has on the wild fur market.
Ranch mink and wild fur
Although inferior to mink produced in Scandinavia and North America, China raises tens of millions each year that are consumed domestically. In addition to their own production, China is the major purchaser of European and North American ranch mink.
Ranch mink auctions rarely withdraw fur. Wild fur auctions will often withdraw the offering if prices are too low.
Consider that quality and color are quite consistent, mink to mink, with ranch furs. Wild furs are all over the board and a buyer may need to look at hundreds of pelts to winnow out the matched pelts needed for a large garment. In addition, ranch mink produce a much larger pelt, two to three times the size of wild mink.
So, prices on ranch fur determine the price of wild fur, and wild fur always suffers, price wise, by comparison. The Chinese do not really need wild mink, but they will certainly purchase and use it if the price is attractive.
Fur is utilitarian
While the prestige of owning fur is important in China, and fashion trends definitely affect fur usage, it must be remembered that fur is purchased as a utilitarian item for most of the cold regions of the world. If you live in China or Russia and have to be out in severe cold weather (as many do), fur is a necessity, not a luxury. It is treated as an expendable, renewable resource. If it is worn all the time, a fur coat wears out and must be replaced. This is how low end mink finds a home in China.
All other things being equal, the weather in China can have more effect on the price of American fur than any other single factor.
China’s economic woes
China’s surging economy, growth of the middle class, and loosely interpreted taxes paid on imported fur resulted in unsustainably large increases in fur prices prior to 2014. Then the bubble burst.
Signs of trouble began in the summer of 2013 with a crackdown on import duties. Big distributors and many high- profile fur company buyers were arrested. China tends to arrest offenders with a political end in mind, and legal penalties in China tend to be swift and severe. It is suspected that some of the violators were executed, which naturally made remaining buyers quite cautious.
As reported in the Western media, China’s rampant economic growth has slowed considerably. This economic retraction, by any account, has been significant and appears to be deepening.
Most noticeably this past summer, huge losses in China’s stock markets have resulted in billions and billions of losses to investors. Many of these investors are the same people who were expected to purchase fur items. This cannot help but have a serious impact on the purchasing power of the Chinese people.
To further complicate matters, China is a major manufacturer of fur items sold in Russia. As Russian currency decreased in value, imported items became more expensive. If a currency loses 30 percent of its value, as the ruble did, goods imported from China increased proportionally.
Couple that with economic sanctions by the West and low oil prices (Russia depends on oil for their balance of trade), and Russia is not buying fur. China, naturally, is not buying fur to sell to Russia.
Wild fur producers were anticipating North American Fur Auction’s September sale to set some kind of price benchmark for the upcoming 2015-16 trapping season. They were to be disappointed.
On Aug. 12, NAFA released a letter, a portion of it read:
“After thorough consultation with our agents and buying customers in Russia and China, we have elected to not hold a September 2015 auction. Unfortunately, the market for our largest unsold inventory, which is raccoon, has not moved in a positive direction since our June sale. We feel it is not in our best interest to have an auction under these circumstances and potentially set a more negative tone.”
It is NAFA’S intent to create a catalog of unsold fur and to “aggressively pursue every opportunity to make private treaty sales.” They will attempt to sell fur in one-on-one sessions with potential buyers, without resorting to the auction process.
Next up will be Fur Harvester’s Auction in North Bay, Ontario, on Jan. 25, 2016. NAFA’s first sale starts Jan. 31. Fresh goods offered in these auctions are early caught fur, which typically do not bring prices as high as furs in the March and April auctions.
This year’s market?
With so much uncertainty, do not expect local buyers to gamble on any increase in fur prices this fall. Opening prices will be cautious.
Muskrats. The Koreans, who buoyed the price of muskrat until last spring, turned to cheap mink last year. With China as the major market, muskrat values will sink accordingly to levels somewhat lower than last year. At the moment, expect averages, minus kits and damaged, to be in the neighborhood of $4.
Otters. Otters are a Chinese item. Illinois otters fell last year to averages of around $30 (down from a 2013 high in the $70s). Other Midwestern sales were proportional. A good guess is that opening prices on otters will be somewhat lower than last year. This would be a good year to send your otter to a tannery as the market demand for tanned fur at sport shows and other outdoor markets remains high.
Mink. By all accounts, the market for wild mink will be brutal this year. I was speaking with a representative of FHA and, when asked about mink prices for the upcoming season, he said expect about $6. I said a $6 average seemed pretty low, and he informed me he was talking a $6 top, not average – for stretched and dried goods.
Female mink tend to bring about half as much as the larger males, and expect green goods to be discounted as well. This is another item that would be worth tanning this year.
Fortunately, folks trapping for a living are few and far between. Fur markets run in cycles and after every downward turn the market rises again – fur is fashionable and the demand will be there again.