New figures indicate wool production likely to keep falling

New figures indicate wool production likely to keep falling


News
Australian Wool Network NSW and Queensland manager Mark Hedley said the decrease in wool production was not a huge positive for the market. Photo by Jamila Toderas.

Australian Wool Network NSW and Queensland manager Mark Hedley said the decrease in wool production was not a huge positive for the market. Photo by Jamila Toderas.

Aa

Wool production will drop more than 12 per cent for this financial year.

Aa

Wool production will drop more than 12 per cent for this financial year, and will likely keep falling.

The influx of drought-affected clips has impacted wool prices over the past month, but the industry is also seeing just how many Merinos didn't even make it to shearing.

The Australian Wool Production Forecasting Committee released their latest update last week, predicting shorn wool production will be at 298 million kilograms greasy for the 2018-19 year.

This compares to 341.3m kg produced in 2017-18, a decline of 12.6pc.

In November, the committee, which releases forecasts three times a year, predicted wool production this year would only drop to 305m kg, or about 10pc, while its September outlook thought 322m kg, down about 5pc.

However widespread rainfall has remained elusive since then, and sheep slaughter has increased year-on-year by more than 20pc.

This will keep pushing production lower into the 2019-20 season, the committee forecasts, with predictions it will fall another 4.5pc - and that's with 'normal' seasonal conditions.

Committee chairman Russell Pattinson said adult sheep numbers continued to decline.

"To the end of January 2019, there has been 25pc increase in the adult sheep slaughter numbers compared with the same period a year earlier," Mr Pattinson said.

"Along with a reduction in greasy wool production there has also been significant changes in key test parameters, a further reflection of ongoing dry conditions.

"Average yield, which currently stands at 63.8pc, is at its lowest level in eight seasons while the mean fibre diameter of the national clip is 0.5 microns finer than at the same time last season.

"There have also been considerable reductions in staple length, staple strength and vegetable matter."

Some rain in March may help producers hang onto stock if follow-up falls are timely, the committee said, with wool growers looking to hang onto valuable breeders.

Australia's biggest wool producing state, NSW, will have the biggest drop in production year-on-year, predicted to grow 20.4pc less in 2018-19 than in 2017-18, while Queensland production will decline 11.3pc this year, according to the committee.

Victoria will lose most of the increase in production it gained in the 2017-18 season (where greasy wool figures climbed 8.9pc) to fall 6.5pc this year, with the committee forecasting the state will produce 68.7m kg of greasy wool in 2018-19.

South Australia is likely to grow nearly 11pc less wool this financial year, with Western Australia down 7.2pc and Tasmanian production falling 4.2pc.

National Council of Wool Selling Brokers of Australian executive director Chris Wilcox said in his latest industry newsletter that if the committee's prediction of wool production falling a further 4.5pc to 285m kg greasy is correct, it will be the lowest level for shorn wool production since 1923-24.

"The declines come despite the long run of high prices for Merino wool and is the direct result of the drought," Mr Wilcox said.

"In some regions, the drought is reported to be the worst in living memory. It will take some years for Australian wool production and sheep numbers to recover once the drought breaks."

Mr Wilcox said the committee was able to draw on the latest monthly data from the Australian Wool Testing Authority, which was also released last week.

"The weight of wool tested in March was down 3.7pc compared with March 2018," he said.

"This is a smaller decline than the 5.5pc year-on-year drop in February and the 12.2pc fall in January.

"This smaller monthly decline for Australia meant that the weight of wool tested for the 2018-19 season to March was down by 10.3pc.

"As with previous months, there were large increases in the weight of wool tested of 18.5 microns and finer, with 16.5 micron and finer up by 74pc for the month.

"In contrast, the weight of medium micron Merino wool continued to fall sharply: 21.6 to 22.5 micron wool was down by 39pc."

The Eastern Market Indicator currently sits on 1943c/kg, more than 170c/kg clear of the same time last year, but below the 2116c/kg it peaked at in August last year.

Australian Wool Network NSW and Queensland manager Mark Hedley said the decrease in wool production was not a huge positive for the market.

"Our numbers are getting to some of the lowest levels we have seen and I wouldn't say that was necessarily a great bonus to market, I would like to see numbers back up so we can see all mills getting the throughput that they need," Mr Hedley said.

"What we are seeing is a lot of drought-affected wool and that is hard for the market to cope with - the market still very strong for any high yielding good style wools and we don't have a lot of those in the market at the moment."

Mr Hedley said not being able to fill the market demand was "no doubt" a concern for the industry.

"When mills can't get [wool], they are switching to other fibres and that is always a concern to us," he said.

"For woolgrowers selling into this market it is the third year in a row we have had good value for our wool, but this is our smallest production in those years - there has to be some flow on to the mills that can't access the wool they are after and that shows when they start to move into other avenues."

Mr Hedley said the biggest impact on wool production for 2019-20 would come in the first three months of the season, July to September, with NSW particularly dropping in quantity because of the number of sheep shorn early and sold at the same time last year.

"If we can get a bit of rain, we will stop that production slide."

Aa

From the front page

Sponsored by