Focus on advantages of natural fibres may be needed to claw back wool demand

Call for sector to step-up and promote wool benefits

Sheep
As wool harvesting gets underway in many parts of Australia, all eyes are on a recovery in domestic and global consumer demand to help improve prices for the natural fibre.

As wool harvesting gets underway in many parts of Australia, all eyes are on a recovery in domestic and global consumer demand to help improve prices for the natural fibre.

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Analyst calls for all wool stakeholders to promote the fibre to lift demand.

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As the Australian wool industry emerges from a three-week physical auction recess, and with winter shearing in full swing across many parts of the country, it is an ideal time to focus on the 12 months ahead.

Usually a few brave industry analysts will raise their hand to boldly predict where the Australian Wool Exchange (AWEX) Eastern Market Indicator (EMI) level will be by Christmas.

But this year - perhaps not so unexpectedly - few are willing to risk their reputation.

The reality is, we can analyse factors such as market swings, auction clearance rates, sheep numbers, consumer confidence, mill orders, seasonal impacts and much more until the cows come home.

But the volatility witnessed in the trade during the past four months is likely to be far from over.

One projection that has been confidently shared by many is that we could be facing 18-24 months of unpredictable market fluctuations.

So, now is the time for us to unite as an industry, support each other, be available for conversations, work more closely with all components of the supply chain and ensure we make decisions that best suit our individual circumstances.

Prior to national auctions closing for the winter recess, there were some encouraging signs for wool.

In particular, 17.5-micron wool was up 92 cents per kilogram for the week leading into the break and closed at 1581c/kg. For 26 micron fibre, the values were up 50c/kg during that week.

China was the key influencer in driving demand and the small hints of renewed confidence.

When we look at annual weekly auction clearances for 2019-20, we see the market has averaged sales of 26,500 bales.

But in the first nine months of the season, the average clearance was 30,000 bales per week. For the final three months, this fell to 20,000 bales per week.

In the final two weeks prior to the winter recess, there were 30,000 bales sold at auction again.

Last week there were about 47,000 bales on offer when the auctions resumed for 2020-21 at the three Australian selling centres.

But the surge in COVID-19 cases in Victoria - and the sprinkling effects of the virus in other states - has strongly impacted on Australia's Consumer Sentiment Index. The Melbourne Institute and Westpac have reported a 6.1 per cent decline in July, after a 6.3 per cent rise in June.

Fears of prolonged economic damage were also evident in longer-term forecast trends.

On a global level, The Conference Board and Nielsen have reported that deteriorating job prospects and rising anxieties about personal finances had underpinned a record drop in global consumer confidence in the second quarter of 2020.

Consumers spent more on necessities and less on discretionary items - and saved more money.

So here is our challenge.

How do we make woollen garments and woollen household goods necessities?

A colleague this week entered a Launceston carpet store and told the sales manager she wanted 100 per cent wool carpet for her new home.

The salesman spent considerable time trying to convince her to purchase a nylon carpet, saying it "will wear much better and not show stains".

As an industry, perhaps a first step is to lift our efforts in educating others about the benefits of wool.

Let's take a moment to visit our children's schools and talk about the natural characteristics and advantages of wool - explaining the supply chain from the sheep to the shop.

Let's develop a nation-wide online program that allows our students to become wool industry brand ambassadors.

Let's work with retailers to train their sales' teams so they think of the wool fibre first.

Bumper stickers, targeted advertising, social media posts, conference presentations, blogs, billboards - there are so many opportunities to enhance education and drive demand.

It's up to us as an industry to take the first step.

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