The Jacobsen derived its leather demand index by using an oscillator that captured an index from 1-100.
The index is created from year over year changes to each of 4 time series.
- Car sales data using a multiplier which includes the percentage index of leather construction is weighted by approximately 14%.
- Year-over-year leather furniture sales is weighed by approximately 18%.
- Chinese exports of shoes is evaluated along with –
US sales of shoes that are leather – which is then weighted by approximately 68%.
Demand for leather moved lower in July, which was directly reflected by the decline of hide prices. The contraction in global markets spilled over into Chinese equities which saw unprecedented volatility, as the Shanghai index whipsawed, notching up significant losses. In August, Chinese import and export data followed July’s declines, which reflects a continued contraction in economic prosperity. In the U.S. the data is more positive, with retail sales bouncing back in July, and shoe sales showing solid gains. Car sales data has been mixed year over year, but the sales number have been positive.Read More
The following chart tracks BBS and NBC hide prices post ACLE from 2011 through today. Although the story has yet to be written for the 2015 fair, follow through early signals indicate a recent uptick with the US steer market seeming to have stalled with prices holding steady during the leather show into this week.
The chart below shows a mixed pattern of hide price trends post show with prices increasing three out of the last five years. Despite record-low kills, the slowing growth in China is weighing heavily on its leather markets, particularly those for domestic consumption which rely heavily on US cowhides and other global sources.