SOUTH Australian processor and exporter Michell Wool is offering what is believed to be an Australian first - forward contracts for carding wool.
In response to unprecedented demand from its overseas customers it is offering woolgrowers the opportunity to lock in near historical high prices for oddments such as locks and crutchings, delivered to the company's Salisbury mill prior to the end of December.
Michell chief executive officer Steven Read said the processing capacity at Salisbury and their other mill at Suzhou in China were fully booked for at least the next four months and sourcing greasy wool to meet this demand was becoming a concern.
The Salisbury plant will require 15,000 bales before Christmas.
"Demand is being driven by woollen garment fashion, including the popular double fronted fabric used in coating for the Northern Hemisphere winter. Consequently, prices for Merino and crossbred oddments have been driven to unprecedented levels creating a unique opportunity for Australian wool producers," Mr Read said.
"To put this demand into perspective, locks are trading at the 99th percentile for the past 15 years and the discount for all carding wool to equivalent fleece lines are at historic lows. Recently, a significant SA pastoral client averaged $1200 a bale when selling their cardings directly to Michell - with no handling and broking charges being deducted."
Mr Read said the absolute and relative price of carding wool made it a compelling time for growers to secure guaranteed high prices.
" Now is the time to 'lock in your locks'," Mr Read said.
Independent wool consultant Andrew Dennis, Rosewood Wool Services said it had been "astounding" to see the strength of carding wool prices in the past 12 months.
The basis between carding and Merino fleece wool remained very narrow with the latest AWEX weekly market report showing the Merino carding indicator at 1093 cents a kilogram compared to 21 micron fleece wool at 1263c/kg for the southern region.
Mr Dennis said buoyant prices were being driven largely by the fashion trend of double-sided fabric, popular in women's wear and casual wear.