Elders up­beat on wool prices

Countryman - - WOOL - Ann Rawl­ings

Low stocks of Merino wool and a healthy ap­petite for the fibre will con­tinue to de­fine the Aus­tralian mar­ket into 2019, ac­cord­ing to Elders gen­eral man­ager op­er­a­tions David Adam­son.

Mr Adam­son said he ex­pected the East­ern Mar­ket Indicator would stay in the high ranges of the past 18 months.

“If it stays dry (in the East­ern States), there will be fur­ther pres­sure on sup­ply, and de­mand will re­main, and it will take a long time for grow­ers to re­build their flock,” he said.

“I think we are go­ing to be short on sup­ply for some pe­riod of time in Aus­tralia, and this will put pos­i­tive pres­sure on prices mov­ing for­ward.”

Mr Adam­son, who spoke re­cently at the Aus­tralian As­so­ci­a­tion of Agri­cul­tural Con­sul­tants WA an­nual con­fer­ence, said the fun­da­men­tals of the global wool mar­ket were low sup­ply, low stocks and firm de­mand.

“These three fac­tors in any mar­ket are great, but the two things . . . that are a long way out of our con­trol are the China and US dis­cus­sions and the over­all level of price that the wool mar­ket sits at,” he said.

Mr Adam­son said China was a sig­nif­i­cant pro­ducer of wool in it­self; how­ever, most of the fibre pro­duced in that coun­try was used in tex­tiles.

“On a greasy ba­sis they pro­duce more wool than Aus­tralia but their net yield is sig­nif­i­cantly lower,” he said.

He said China was not con­sid­ered in di­rect com­pe­ti­tion with Aus­tralia in terms of pro­duc­tion but it was a sig­nif­i­cant part of the wool-buy­ing scene.

“China is by far the big­gest player in Aus­tralia,” Mr Adam­son said.

“They have been a fan­tas­tic sup­porter of the Aus­tralian in­dus­try but they do buy be­tween 75 and 80 per cent of all of our wool.

“But if there was a po­lit­i­cal event, bi­o­log­i­cal event or eco­nomic event in China, that can pretty quickly im­pact the mar­ket.”

Mr Adam­son pointed to 2002, when a deadly res­pi­ra­tory virus caused the col­lapse of one of the four so-called “su­per­cy­cles” in the wool mar­ket.

“When SARS kicked off, about 8000 Chi­nese peo­ple con­tracted the dis­ease, and this caused the col­lapse of the 2002 su­per­cy­cle,” he said. “This bi­o­log­i­cal event high­lights how close we are to events in China.”

Mr Adam­son said US-China trade ten­sions could fur­ther af­fect the mar­ket, given the close ties be­tween re­tail­ers and man­u­fac­tur­ers in both coun­tries. He linked the re­cent volatil­ity in the wool mar­ket to these dis­cus­sions.

How­ever, he said wool as a fibre in cloth­ing had gained in pop­u­lar­ity, with ex­cit­ing de­vel­op­ments in ac­tive wear and even footwear. This was echoed by an Aus­tralian Wool In­no­va­tion spokes­woman, who pointed to de­vel­op­ments in overseas re­tail­ers us­ing wool and the con­tin­ued de­mand for Aus­tralian fibre.

“Lead­ing in­ter­na­tional brands and sport com­pa­nies, such as Nike and Adi­das, recog­nise a height­ened in­ter­est and de­mand for nat­u­ral fibre, and in par­tic­u­lar wool, in clothes, run­ning shoes, and soft tai­lor­ing. So we see de­mand strong for some time,” she said.

“The US mar­ket, rel­a­tive to its pop­u­la­tion, has a low wool con­sump­tion. We en­deav­our to change this. In our new con­sumer cam­paign, we are chal­leng­ing syn­thet­ics head on in this mar­ket.”

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