Third weekly fall but future bright
A third weekly drop in wool prices sent the Eastern Market Indicator down 6 cents to close at 1738c/kg clean last week, but forecasts of economic growth look positive for wool.
National Council of Wool Selling Brokers of Australia executive director Chris Wilcox said it seemed to be a week of adjustment between selling regions.
“While fine wool values differed between regions, one fairly consistent category was 20 to 23-micron wool, which mostly recorded increases across the three selling centres,” he said.
“The oddment market again fell back, although not to the same dramatic extent seen the previous week. The Western Market Indicator eased back 2 cents to 1819c/kg.”
At the wool stores last week, Gillingarra wool and sheep producer Jim Kelly witnessed his Rushholme clip auctioned through Elders to a top price of 1155c/kg greasy for two bales of 19.1-micron fleece wool with a length of 79mm and yield of 60.7 per cent.
Mr Kelly, his family and partner Janine Varley run 2500 Merino breeders, which are bought in as part of a year-round crossbreeding program using Poll Dorset rams.
“The sheep are kept in good condition on paddocks of blue and white lupins plus summer salt grass and essential mineral licks,” he said. “We received the best prices for our wool since the early 1990s and my confidence is back.”
Mr Wilcox said a positive outlook for the wool industry was also sparked by the World Bank and the International Monetary Fund, both lifting their forecast for world economic growth in 2018.
“The World Bank now predicts that the global economy will grow by 3.1 per cent in 2018, up from 3 per cent in 2017 and 2.4 per cent in 2016,” he said.
“It also lifted its forecast for economic growth in 2019.
“The bank expects that advanced economies will see much stronger growth in 2018 than previously expected, led by the eurozone countries (0.6 per cent higher) and the US (0.2 per cent higher), although China only slightly up by 0.1 per cent.
“These higher growth forecasts are positive for wool, as long as the higher economic growth flows through to improved consumer spending.”
Mr Wilcox said the latest data available from China on its exports of wool products for November 2017 was mixed.
“After a strong rise in exports of wool-woven clothing from November 2016 to July 2017, exports have declined for each month over the past four months,” he said. “There was a 28 per cent drop in November, with declines in exports to all of the major destinations, with the exception of South Korea.
“Even so, exports of wool-woven clothing in 2017 to November was still 63 per cent higher than for the same period in 2016.
“In fact, 81 million pieces of woven wool garments for the 11 months, it’s the highest volume of these garments for this period since 2008.
“Wool knitwear exports lifted in November by 8 per cent year on year, the first monthly increase since January.
“There were large increases in exports to the European Union, South Korea and Hong Kong.
“For the 11 months to November, China’s exports of wool knitwear were down by 11 per cent, led by the US (down 26 per cent).”
Turning to China’s imports of raw wool, Mr Wilcox said data for November showed a 41 per cent year-on-year lift, led by a 136 per cent increase in imports from Uruguay and an 82 per cent increase from other countries.
“Imports from New Zealand were 22 per cent higher, while imports from Australia were 23 per cent higher,” he said.
The Elders International Wool Report brought the Northern Hemisphere’s cold weather into the equation, saying most of China was hovering around zero degrees.
“Adding to this lack of global warmth is the sustained uniform business in China is keeping worsted fabric production moving,” the report said. “Adding to the Chinese uniform business have been the Korean Winter Olympics and also the Japanese Summer Olympic uniforms required to be made from scratch.”
With 100 million viewers watching the US Super Bowl LII taking place in one of the coldest areas of North America this week, the stage was set for the natural warmth of wool to be aired.
Australian Wool Innovation chief executive Stuart McCullough said it was unfortunate commercial airtime was too expensive (a 30-second commercial is over $5 million), although he did not rule out a future Super Bowl spotlight.
Gillingarra woolgrower Jim Kelly pictured with his 1155c/kg greasy top-priced Rushholme consignment of 19-micron Merino fleece.