Growers who got in early now reaping rewards of the forward sell

Forward thinkers coming up trumps from selling strategies

Sheep
Growers who forward sold wool are tending to fare better than those who are now left at the whim of current market fluctuations.

Growers who forward sold wool are tending to fare better than those who are now left at the whim of current market fluctuations.

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Wool growers who forward sold for this season have benefitted during market rollercoaster.

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On-farm wool price management requires pre-emptive and pro-active decision-making.

The time to act is most often when the economic outlook seems robust and consumer confidence is positive.

It seems the majority of growers decided that selling their wool in the spot market was preferable compared with forward selling.

Were they convinced that prices would remain trading at record levels for years to come?

Were wool growers given the opportunity to forward sell by their wool service providers?

Wool growers who locked-in their prices for the 2020-21 season and beyond are now reaping the advantage of their selling strategy.

It is interesting that more growers did not adopt this strategy when prices reached the upper end of the long-term trading range.

Forward selling still remains an option - as prices may well drop further before they begin to build strength again.

At the peak of 2019, 21-micron wools were selling at up to 2214 cents a kilogram against a five-year average price of 1696c/kg and - only last week - these closed at 1299c/kg, which was about 41 per cent lower than the highest levels.

The other fundamental that is causing more downward pressure in the wool market is Australia's currency, which is now strengthening against the US Dollar - trading above US68c , after being as weak as US55c on March 19, 2020.

This volatility in foreign currency causes significant disruption for our northern hemisphere customers that use the USD as their basis for trade.

The majority of Australian wool growers are now at the mercy of the spot market, which continues to deteriorate in price and erode in confidence.

Farm and broker warehouse stocks continue to build, which will limit any chance of a fast recovery when demand returns to the wool market.

Sold quantities in May were reported to be 35 per cent lower than at the same time last season.

How much lower would wool prices be if 'normal' seasonal volumes were being offered into the current market?

It is time to focus on what is in our control - and that is cost of production.

With arguably the best start to our growing season seen in many areas since the 1982 drought-breaking rains, we must take advantage of our opportunities.

The engine room for our sheep systems must surely be to increase our lambing percentages - as this will reduce the cost of wool production or increase the productive lifecycle of breeding ewes.

From all reports, we are hearing exceptional results as growers complete lamb marking programs. This sets-up our industry for long-term recovery.

Way back in 1992, Denis Pagan reinforced a key message to a young Essendon football team reserve side urging 'don't leave any stones unturned'.

He was challenging the team to take every opportunity given to them to play football at the highest level and do all the little things to set the football club up for the future. For the record, 1993 became a senior premiership year for that club.

Let's take that approach to our sheep and wool production systems and set ourselves and our businesses up for better times ahead.

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