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Coronavirus’ effect on hide prices

Wednesday, 1 April 2020

Coronavirus has not been positive for hide prices. The hide market had already been under pressure for some months, but further concerns about demand and the supply chain’s ability to keep running have pushed prices lower. An unmanageable build-up of hides has the ability to affect abattoir operations considerably, in extreme cases closing them completely.

Car manufacturing has been greatly curtailed across the whole of Europe, and data and analysis from theSauerReport indicates that hide sales for this and other purposes are falling fast. Suppliers now have to choose between low returns from the market, and storage in the hope of better prices in the future. Some cowhides are being collected and salted for a handling fee, to be priced later if and when a sale can be made. Some abattoirs are gearing up for the longer term and making space to store hides for greater periods than would normally be expected. However, long-term storage can have a detrimental impact on hide quality. It is entirely possible that in some cases, hides or skins may end up carrying a disposal cost rather than a market value.

In some cases the prices for cow hides have reached zero, joining the level that some ovine skin prices were even before coronavirus, according to theSauerReport. Storage space will for some start to become a bigger issue than the actual prices paid, as UK tanneries close or reduce operations.

Any potential tanning restrictions imposed in Italy, were always considered an important threat. Italian tanners had picked up extra work from China, and were playing an important role in taking hides. But, the Italian tanning system has come to a halt in some areas and has significantly reduced in others. Although the Asian market is opening again, shipping logistics are hampering the switch back towards Chinese tanners; there are apparently still some sales being made, but at a lower price.

Duncan Wyatt

Lead Analyst - Red Meat

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