Heavy Native Dairy Cow (HNDC) prices have come off of the floor, trading 50 percent higher over the last three weeks. Growing demand from the furniture industry has kindled increased demand for leather, which can justify the rising prices for HNDC. In recently released Federal Reserve Economic Data, US furniture sales of $9.8 billion in June have bounced back to be more in line with prior year’s levels, up from April’s record low of $4 billion. It is reasonable to think that this is tied to the rising, new, single-family-home sales with buyers in need of home furnishings. From July to June, sales of 901,000 are up 13.9 percent which is a significant increase from April’s low of 700,000. If demand for new homes continues to increase, it is reasonable HNDC pricing could sustain the forward movement and close the spread to pre-pandemic levels. However, the risk of the disinterest in the market for leather goods while the preference for substitutes, such as synthetic, remains.

Figure 1.

Furniture sales for 2016 – July 2020 are shown on a monthly basis in millions of dollars (left y-axis). 2020 Heavy Native Dairy Cow prices are shown in dollars per piece (right y-axis).