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Wool prices rise as demand soars for our fine fibre
WITH prices hitting record highs, it’s a very good time to be in the wool industry.
Prices have continued to climb over the past few weeks with the Eastern Market Indicator hitting 1983c/kg last week.
“We’re living in high territory,” said Scott Carmody, trade consultant for AWI and commissioned wool buyer at auction.
“We’ve never been here before.
“There are some pockets of wool that have sold higher in the past, but as a whole we’ve never seen prices anywhere near today’s prices.”
Mr Carmody said there were a number of factors leading to high wool prices including an increased demand from Europe and China.
“There’s a growing demand in China. Previously most of the wool processed in China was being exported,” he said.
“But now about 60 per cent of it is consumed domestically because of the growing middle class in China.”
Mr Carmody said there were some minor concerns about the rapid price rise over the past few weeks.
“We need to hear back from the consumer,” he said.
“We need to wait and see if these prices are sustainable.
“But if consumer demand stays the way it is and global production remains as stagnant as it is, if consumers want the product they’re going to have to keep paying for it.
“I’m not too concerned but it’s sort of in the back of your mind, and a lot of wool growers are that way as well.
“I think the demand is really overpowering supply volumes at the moment, which is driving that price.
“But I’d like to see some consumer levels before you start predicting years of these prices.”
Mark Murphy from Karbullah Merino Stud, is set to reap the benefits of the current wool prices as he prepares to sell his wool this week.
“We’ve got all the wool now and we’ll be selling it this week,” he said.
“We haven’t got our valuation yet but the market is fantastic.
“The EMI is at record prices, but until you actually sell some wool in regards to your own country and your own wool I think most people are in uncharted territory.
“But it’s a very nice time to be in merinos.”
Mr Murphy has just finished shearing 3500 merinos.
“The shearing went pretty good,” he said.
“It’s dry so we had no hold-ups.
“We’ve got a few more to do. We bought a few sheep from up north that don’t have quite enough length on them yet. We’re patiently waiting to shear them next month. It will be about 4000 by the end.”
Mr Murphy said he was sympathetic towards those wool growers who were suffering because of the dry season.
“For anyone who has had
❝But it’s a very nice time to be in merinos. — Mark Murphy
low rainfall and a poor season, it is a bit sad. Unfortunately the season is making it tough for some people to get the most out of the market,” he said.
“But I think the market will continue like this for a few years yet.
“There’s plenty of fencing happening and plenty of light at the end of the tunnel.”
Australian Wool Network Southern Queensland sheep and wool specialist, Stephen Maunder, has just returned from China with an optimistic outlook for Australian wool.
“They (spinners and top makers in China) want as much wool as we can produce. They want to know when we can produce more sheep,” he said.
“They are very interested in doing five-year contracts with producers, direct market to the mills.
“They want to make the market more stable. They don’t like the rise and falls in the market. So they can budget easier, just like producers do.
“In the short to medium term China was very positive
about these prices.”
Mr Maunder said most of China’s wool intake would be for their domestic market.
“At the moment 52 per cent of what they process is used internally but in the coming years they want to take it up to 80 to 85 per cent.
MERRY MERINOS: Luke Murphy and his partner Sarah with Vicki and Mark Murphy.
WORKING HARD: Brendan Zappa shears at Karbullah Merinos, a property reaping the rewards of record high prices.
Dave Ferguson shearing a sheep at Karbullah Merino stud.
Luke Murphy working hard during shearing time at Karbullah Merinos.
A graph from AWI showing the five-year AWEX EMI monthly average as at the end of April 2018.
Merino wool about to be shorn at Karbullah Merino Stud.