Buyers battle to buy fine merino wools as drought hits supply
YENNORA, AUSTRALIA: Auctioneer Ian Sharp has been selling Australian agricultural products to the highest bidder since 1968, and he has never seen demand like this before.
Earlier this year, the benchmark price for fine Australian merino wool gained a foothold above the once mythic $A20/kg price as one of Australia’s worst droughts leaves farmers struggling to keep flocks fed.
The surge, up 20% in a year, has confounded buyers who have waited in vain for prices to fall as they had before.
‘‘This is very exciting for an old auctioneer like me in the fact that we are selling at these prices and we are clearing a lot of wool,’’ Mr Sharp told Reuters, shortly before an auction at one of the country’s biggest woolselling sites, in Sydney’s western suburb of Yennora.
‘‘There’s very little wool on hold anywhere on farms or woolbrokers’ stores.’’
Australia controls 90% of global finewool exports, where demand is being driven by Chinese woollen mills and Italian garmentmakers, according to wool bro kers at the Yennora auction.
While wool has long been used by suitmakers, the surge in popularity is being driven by fitness and leisure clothing manufacturers looking for soft, durable and natural fibres.
But the drought savaging Australia’s east, where the bulk of the country’s wool is produced, is hitting flock numbers, leading to lower production, threats to qual ity, and higher prices.
Like any commodity, wool has its ups and downs, with sharp price spikes followed by troughs.
Wool buyers say this has prompted many overseas buyers to run down their stocks and wait for prices to fall.
‘‘I think going back a few months people were prepared to believe this market could correct in a big way — that’s gone now,’’ Peter Brice, of Australian Merino Exports, said.
‘‘We think from October onwards they will need to stock the pipeline up again knowing the further we go, the less wool there will be. The threat of a fairly dramatic reduction in supply next year is really underpinning this market and I think the Chinese in particular now appreciate that.’’ — Reuters