Besieged wool boss hangs on to power
AS we move rapidly closer towards the Christmas recess, the idea of the high (Merino) wool market flushing any increase in volume of wool onto the market is disappearing.
At what is traditionally the highest volume period of the season, this spring has delivered only two weeks where sales have been rostered over three days, with one more to come.
With the market touching levels not seen for more than 30 years it would be safe to suggest there is virtually no greasy stock sitting in stores or on farms around Australia.
Further to that, I was talking with our South African friends this week and they too suggest stocks of unsold or held wool are at record lows.
This suggests to me that probably for the first time in more than 50 years we are experiencing a truly free market, without either market intervention or the residual of the same.
While all of this points to the prospect the wool market should continue to trade along nicely for the foreseeable future, the one thing that does not seem to get mentioned is the sharp increase in the cost of yarn as a result of the very high spot market.
As we know, the wool pipeline is long and convoluted and as a result many manufacturers, brands and retailers are only now starting to see the effect on margins of the current market. More likely it will be six months before the impact flows all the way through.
It might be a case of out of sight out of mind, but I would suggest not. We should always consider the final consumer as the customer and any pushback on retail price (as margins are maintained) will come as a headwind for this market.
Of course this is only the case if demand remains stagnant, but as we know wool is now playing a bigger and more important role in new markets such as sportswear.
So while it seems there is nothing to stop this market from continuing along from where it is, the whole pipeline is yet to feel the true effects. Only when it dows will we know if this is the new level.
The market looked a little “toppy” last week and even with the cheaper Australian dollar early sales this week sales saw most categories drop 10c/kg to 15c/kg.
The exception was medium wool that seemed to hold on to last week’s level and crossbred wool that continued its choppy ride, losing 5 per cent in value.
If you have questions or would like a particular topic covered send email to acalvert @robertsltd. com.au. EMBATTLED Australian Wool Innovation chairman Wal Merriman has been “unanimously” re-elected to head the grower-funded body.
Mr Merriman has been chairman for nine years and was returned following AWI’s annual meeting last week.
His recent behaviour has come under fire and prompted calls for him to resign.
The AGM heard an internal review found Mr Merriman’s viewing of an industry consultative meeting without participants’ knowledge and later swearing at a journalist who questioned him about the matter had not breached the organisation’s code of conduct.
AWI has said Mr Merriman, other board members and senior executives should undertake training in dealing with stakeholders and media.
Asked how his training was progressing, Mr Merriman quipped that “I haven’t been a very good pupil” but would “continue with the therapy”.
Mr Merriman reaffirmed his intention to recontest his board position in 2019.
In the board election, NSW wool grower and broker Don Macdonald was elected to one of three vacancies. Colette Garnsey and James Morgan were both re-elected but NSW wool grower Paul Cocking was not returned.
AWI had recommended votes for Ms Garnsey, Mr Morgan and former AWI consultant Will Wilson, who received the least number of votes.
Mr Cocking received 128,608 votes, just 7284 behind Mr Morgan, prompting claims Mr Merriman had used undirected chairman proxies to unseat Mr Cocking.
AWI declined to disclose how many undirected proxies Mr Merriman used. He said the number was “in line with normal contested elections, slightly up” and he did not believe the voting procedure should be more transparent.