It was a tough and interesting year for the US hide market with sharp price declines influenced by domestic and global issues going back well into Spring 2014. The decline began with the cow hide market in late March, followed by steer hides in late September. Through 2015, prices continued to drop for all US hide selections with the steer and cow selections falling over 40% and 50% from their peak.
While the descent in hide prices in 2015 was similar to many commodities reacting to the economic slowdown in China, there were a number circumstances unique to the hide market. Included are environmental regulations in North China, troubles with hide contracts and opening LCs, a crashing split market and competition from other manmade materials.
It wasn’t supposed to be this way. Looking back at recent history, bad years in the biodiesel industry were always followed by good ones. Odd numbered years since 2009 were good years to be a biodiesel producer. Even numbered years? Not so much. In 2009, Congress finally closed the loophole that allowed “Splash and Dash” to exist.
Prospects for 2010 did not look as inviting with the loophole closed. However, what really set 2010 back was the $1-per-gallon biodiesel tax credit lapsing in 2009. In fact, every year that the credit has lapsed has been a down year for the industry.
Many are calling 2015 the end of the commodity super-cycle as prices have returned to levels not seen since before the housing bubble run up in 2006 and 2007. Successive years of a good soybean crop, heavy supplies of crude oil, and a weak global economy have all contributed to the downward grind of the market. The macro markets sinking have pressured the animal fats prices lower despite a biodiesel production capacity that is much stronger than it was in the mid-2000s.
BFT topped out at $0.3075 in mid March and stagnated in the high $0.2000 before dropping from $0.2800 on September 25 to $0.1900 on November 13. The market was largely supported by oleochemical demand for much of the year, and with end of year inventory reductions and no biodiesel demand, prices plummeted.