Hides pile up with no price relief in sight
Shan Goodwin, Queensland Country Life
7 Feb 2019
CATTLE hides are piling up in warehouses across the nation and going out the door at below the cost of production as the market for leather continues to disintegrate.
Some processors are endeavouring to render the lower quality ticky or dairy cow hides to salvage some value and others are blazing trails into new markets, such as India, but little improvement in demand and prices in the short term is expected.
Beef market analysts specialising in co-products estimate producers are wearing a $50/head loss on the back of hide prices halving in the past 18 months.
Hide skin and leather producers have marshalled on a global level to launch a US$1.5 million marketing campaign largely aimed at informing millennials of leather’s all natural attributes and its sustainability credentials over and above its synthetic competition.
Vincent Topper, from big hide and leather exporter AI Topper, said the worldwide glut of lower quality hides meant Australian processors not prepared to “give them away” could no longer move stock.
The top end was moveable but at a very small margin, he said.
Mr Topper said the shift by major shoe companies to synthetics was the big downward driver of demand for leather but the automotive industry was also contributing.
He felt improving the bottom line was the major incentive for shoe companies to source cheaper materials, as opposed to pressure from animal rights groups to move away from bovine products.
Market consultant Dennis King said hide prices were down a further $1 to $2 a piece across the categories month-on-month, including high grade Victorian hides.
The 280 to 350 kilogram Victorian hides were now back to $19, down almost 60 per cent on a year ago. Ticky Queensland hides in the same weight category are making just $8.50.
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