Wishing the year goodbye

Suffice it to say, most US/Mexican cattle hide traders are only too happy, in fact quite eager, to see the 2003 trading year finally come to a close. Indeed it has been a difficult year and this can be attributed to various reasons. Firstly, the US economy has yet to fully show signs of recovery. Undoubtedly, Mexico relies heavily on the strength of the US consumer. Although the stock market has definitely strengthened this year, the jobs market is still rather lackluster and many Americans do not have a strong capacity to consume as in the past. Additionally, the Iraqi war has also negatively affected trade. The continued uncertainty US troops face and, more recently, the increased attacks, has weakened the confidence of the general western population as a whole. Given that Mexico is one of the strongest exporters to the USA, the above scenarios have surely crippled an already ailing economy. Secondly, the Mexican peso has suffered a true 'yo-yo' effect all year. In late 2002, the currency stood at 9.20 pesos to the US dollar. It closed at the end of November at 11.45 pesos to the dollar, nearly a 25% devaluation. And, unfortunately, there are rumours of yet further devaluation before the year end. Thirdly, the Fox administration is also suffering a political quagmire. Since having been elected, President Vicente Fox has not been able to institute much change or economic reform, given the opposition party's control of the nation's congress. This has damaged the country greatly. Mexico's credibility rating, having been at an all time high during the last couple of years, has once again been downgraded by international credit agencies. Current levels are only slightly more positive than those following the major devaluation in 1994. Fourthly, US hide producers have suffered decreases on lower grade items, key to Mexico's leather business. Items such as small packers and renderers have truly decreased, while big packer material (with higher ticket prices) have increased. This reality has caused Mexican tanners to rely on their domestic stocks, albeit already low, but certainly much less expensive than the alternative. Yet, given the above conditions, the Mexican tanner truly impresses me. He continues forward. The last six weeks have witnessed a slight pickup in business, despite the ailing currency. Much of it may be due to the end of year holiday orders so, regardless of currency levels, tanners must fulfil. However, that same entrepreneurial spirit that I have witnessed for over a decade continues to look forward and remain steadfast, convinced of their own success, regardless of external factors. Ana M Veloso Barrett Hides Inc