[jshepherd]

The 6.5mm shortage really ended near the end of 2004. The 2005 crop was problematic as so many crops were harvested early. The Japanese were paying top dollar for even low-commercial 6-6.5mm to fill quotas in late 2004 and early 2005, and every Akoya house in Hong Kong wanted everything they could get their hands on. Fine grade 6.5mm were slim pickings. Luckily we were able to purchase a harvest in 2004 that covered demand into early 2005.

The latest harvest, however, has been a lot more promising. The early harvest from last month (the coop I deal with) shows nacre depth similar to the average 7mm from last year. We just received our first sample batch of 120 each, 6.5mm, 7mm, and 7.5mm this last week. The 7mm and 7.5mm are very consistent, and the 6.5mm is finally consistent with the latter. A full processing will be completed by next week, so I am leaving this weekend to view and purchase during the Chinese holiday. I have a preliminary promise of 2000 hanks each size in 1st and 2nd by May.

The 8mm Chinese are still not looking good this year, so Japan will still be our primary source. 1st and 2nd tier seems to only account for less than 5%, and as such, the prices are nearly the same as the Japanese (The Japanese now only really produce 8mm and larger).

I received the first sample batch of Japanese pearls 8mm up to 9.0mm last week. The 9.0mm and larger are not looking promising again this year, but we overcompensated last Spring so it should not be a problem for us for a while. I was happy with all but the 7.5-8mm material - of these I only kept about 20%. I have decided not to go to Kobe until late February when I am attending the Suzhou Tahitian pearl auction to have a full selection to choose from.

I think the only real changes this year in China are going to be the freshwater pearls. Prices were up nearly 20% by the end of the year, and this is the year we have all been expecting a major decline in overall production. The only promising factor is that the final production is still better than years past. Price will, however, go up in all categories of freshwater - this is certain. They will rise in 2007 as well. In 2005 production was at 1,600 tons. The 2006 forecast is for only 900 tons, and 2007 may well drop to 600 tons. But, with the higher prices, so many more will jump back into the game, and the cycle continues…