World outlook
Excessive heat has already had a significant affect on the northern hemisphere this summer, and extreme weather will likely be an increasing phenomenon.
was exacerbated by the pandemic and low incomes. This is why the FAS has called beef exports the “escape valve” for producers there. As the country’s slaughter climbs, the challenges for Brazil’s hide sellers grow. The price of Tr1 has been on a declining trend for the better part of the past two years. The current price of US$0.65/ft2
is almost 20%
lower than August of 2022 and 45% lower than the same point in 2021. Also, lower quality material from Brazil struggles to find a market – much as lower-tier materials everywhere.
China’s herd grows slowly China, the largest importer of cattle hides, also has the third-largest cattle herd, which is projected to grow more slowly. The inventory is already high as are costs, which diminished profits, says the FAS. The country’s industry is also dominated by small- and medium-sized farms that are less efficient. FAS reports that beef consumption is expected to be only marginally higher this year and the outlook for beef imports is uncertain.
India’s big, expanding herd By the FAS numbers, India has the world’s largest cattle herd and it’s expected to see good growth over the next few years. This is largely due to a healthy calf-crop, thanks to improving dairy cattle reproductive success. The total herd is made up of bovine dairy cattle and the Asian domestic water buffalo. Of course, much of the Hindu-majority population does not consume beef and slaughter is not allowed in all areas. On the other hand, the Muslim and Christian populations consume beef in volume and is growing, according to the FAS.
Challenging European Union climate The EU accounts for almost 8% of the world’s cattle but that appears to be on the decline. Beef production has been falling for five years and the herd size shrinking. High inflation in the post-Covid era is partly to blame as high costs and below-par beef demand
Leather International /
www.leathermag.com
have taken their toll. In addition, the new EU Common Agricultural Policy may impact beef cattle feedlot farmers, reports the FAS.
From the hide perspective, lower leather demand from traditionally strong sectors such as automotive and footwear have driven down hide prices. Ultimately, only the best quality veal skins and sheepskins – in demand by luxury brands – have been strong, leaving most bovine skins on a downward trend. For these too, only the best quality hides have been seeing decent levels of demand.
“From the hide perspective, lower leather demand from traditionally strong sectors such as automotive and footwear have driven down hide prices.”
Overall challenges
It bears repeating that there are many shifting factors that are influencing cattle inventory and slaughter levels. Just as Brazil’s cattle and hide industries were affected by the suspension of exports to China in the spring of 2023, other unexpected events can change the patterns.
Climate is one such unpredictable factor. Excessive heat has seriously affected wide swaths of the northern hemisphere this summer. Some might think this is a one-off event, but indications are that extreme weather is an increasing phenomenon. “It’s happening. It’s hard to say exactly what the effects will be, but the impacts will be regional,” Peel says. As for the long-term impacts? He says that it could call into question the sustainability of production in certain areas. In countries like the US, tighter supply could be a real benefit to the hide industry. Shifts in leather demand can happen swiftly and strongly, unlike changes in the cattle supply. Most importantly, it would not take a dramatic uptick in demand to have a real impact on hide prices in the face of lower supply.●
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Triff; Hypervision Creative/
Shutterstock.com
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