Hike in hide prices

Increased European demand for leather is fuelling a mini-boom in Brazil, where ranchers are boosting their 2001 export forecast to 1.83 billion reals (US$850 million) from an earlier prediction of 1.61 billion reals (US$750 million), says Jose Roberto Scarabel, president of the Brazilian Tannery Industries Center. US hide exports shot up 25% to $2 billion last year after the BSE scare struck, according to Leather Industries of America. And January exports were 12% ahead of last January's. According to LIA president Charlie Myers: 'The raw cattle hide market has gone through the roof.' He said the prices of some grades of raw US cattle hides have risen about 55% in a year, from around $55 to $85 a hide. At the same time US exports of hides and skins rose to $133 million in January compared with $101 million last January, according to federal trade statistics. In 2000, the US exported 21.5 million cattle hides compared with 17.5 million in 1999. Asian countries in particular buy much of the supply, say the LIA. Worldwide hide prices are up 15% in the past two months according to Hidenet.com, the internet market report. Shep Hermann, manager and a co-owner of Hermann Oak Leather Co, says he hasn't seen anything like it in his 30 years in the industry. He recalls that in the late 70s, hide traders were actively manipulating the market, causing an even steeper rise in prices. It was like 'OPEC pulled some of the oil off the market', he says. This time, however, it's an actual supply shortage. 'The demand is strong, but it has been for the last year or two', he said. The decline in supply is also cyclical, says Hermann. When prices are good, cattlemen will start breeding more animals. 'It's like any commodity', Hermann said. 'There's going to be a period of instability, but eventually the market will correct itself.'