A hide trader's perspective

16 May 2003

The Mexican tanning industry began 2003 with the usual optimism and pride which followed a generally good economic year. Despite a 25% currency devaluation since the fall of 2002, coupled with rumours of war against Iraq, the hide trade, albeit at times sluggish, has remained consistent. Although the weaker dollar undoubtedly aids exports in Mexico, from a hide trader's perspective it adds to increased instability and uncertainty at a generally weaker time of the year with respect to the imminent Easter holidays, which Mexican society undoubtedly regards second only to Christmas. 'Consistency' is the key term in describing the Mexican hide trade. While most tanners could never justify the purchase of traditional big packer items such as the native/branded steers and heifers, they manage to produce various lines of high-end items ranging from garment leather to shoe uppers to even small leather accessories using typically lower grade cattle hides such as small packers, cows, renderers and bulls. Additionally, they command the respect and attention of sow and pigskin producers throughout the US having succeeded Chinese and Taiwanese tanners as prior traditional buyers of the same commodities. Mexico is a market in which every aspect is completely affected by what takes place in the US economy. Any hiccups or pauses will translate to a similar effect trickling down south of the border. Main hide purchases consist of lower end material and, in general, the economy suffers from volatile currency fluctuations along with liquidity issues. While there are larger, more well-known and established tanneries which regularly purchase the higher end big packer material, mainly for the automobile upholstery business, the vast majority of tanners throughout the years have proven their loyalty and consistency through their purchase of lower grade hides from the US. Mexico does produce cattlehides, used primarily by domestic tanneries, but this production is small and does not satisfy the needs of approximately 700 tanneries in both quantity and quality alike. Considering the Iraqi crisis, business to date this year in Mexico has generally been steady, with the usual seasonal decrease following the Anpic leather fair hosted in Leon, Guanajuato, in late February. This sluggishness has a tendency to continue well into late spring and early summer just prior to the true boost of fall and winter orders which take place in around July and August. However, as was the case in early March, following the declaration of war in Iraq, the US dollar strengthened dramatically and unexpectedly which not only increased cattlehide sales and general liquidity but also spiked hopes of optimism for a stronger US economy towards the second half of 2003. This will undoubtedly have a positive effect on business for Mexican tanners. In summary, there is never a dull moment trading cattlehides exclusively into this market. Mexico provides consistency and promise for an enterprising group of tanners who are truly creative, entrepreneurial and engaging. Ana Veloso Barrett Hides

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