Livestock hide values have fallen by up to A$20 each in the past two months and this trend is expected to continue in the short term, as exporters are battling a rising Aussie dollar and the SARS epidemic which are severely affecting two major buyers of Australian hides and skins, Europe and China.

Some markets already have a backlog of product which is contributing to the generally weaker demand for hides and skins. According to National Livestock Reporting Service (NLRS) figures, this time last year, 181-220 kg (dressed) green hides (ex-meatworks door) were A$72, but at the end of May the same hide was worth A$51.

In an interview, Ian Stokes-Blake of hide and skin producers A I Topper and Company, said: ‘Values have fallen by 15% and in the next six to eight weeks, will drop a further 15 to 20%. Considering average prices have risen for the past five years, they probably still have a bit to fall. The Chinese are just not travelling anywhere, so trade has come to a standstill.’

President of the Australian Hide, Skin and Leather Exporters Association, John Gorman, said Europeans were major buyers of Chinese material but inspectors and buyers of the finished product could not get to China to look at the goods now, so a backlog was occurring.

He added: ‘This will have major repercussions for the next six months. They will have a stockpile of goods and until they sell them they will not be able to buy any more. Compounding the lack of demand for Australian material is the rising Australian dollar, which is likely to hasten the falling price trend. The exchange rate is terrible for exporters at the moment, and financial experts predict that the Australian dollar will keep getting stronger.’

Ian Scher at Casino Hide Trade estimates Australian hide prices have fallen 18 to 20% and expected values to continue to fall over the next month or so in the lead up to the Northern Hemisphere’s summer. In a published interview he said: ‘There is no doubt the market overseas is still under some pressure because supply is exceeding demand. Consumer confidence is low in the US and Europe and domestic spending in China and Hong Kong is being badly affected by SARS. Prices will remain under pressure, with large kills expected in the next month in the US and South America, and consistent kills in Australia. But domestic numbers depend on the tight post-drought cattle supply and the ability of processors to compete given their lower returns.’

The sheepskin market is also being affected, with market analyst Ross Cargill stating that skin market values were down around 25% since early March.