Market downturn a time to think about tactics to lift productivity from good season

Trade players continue to be unsettled, hesitant and cautious

Sheep
Seasonal conditions are great for wool production, but strategies will be needed to get the most out of the lacklustre market - including filling bales to capacity.

Seasonal conditions are great for wool production, but strategies will be needed to get the most out of the lacklustre market - including filling bales to capacity.

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Despite wool market challenges, there is 'money in mud' according to wool analyst.

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Magnificent August rains continue to deliver near-perfect growing conditions throughout much of our eastern Australian sheep and wool growing regions.

Lamb and mutton markets seem to have found support levels, but wool values continue to soften - as poor demand can not keep up with an increasing supply of old and new season wool.

Most noticeable is the absence of key bulk buyers from China and Europe.

These companies have reported great difficulty selling, so are not prepared to buy until they can secure new orders.

These companies will reduce their production volumes and only re-enter our market when prices reach levels that fuel profitable and ongoing sales.

It is unfortunate, but we are yet to see the bottom of this price cycle.

Our three-week Australian winter auction recess period has been and gone and many warehouse stocks of wool brokers continue to build rapidly as many growers continue to pass-in their offering.

Add to that our recent strengthening Australian Dollar against the US Dollar, from a March low of 0.5420, and further pressure remains on our spot market.

Riemann forward financial trade levels are factoring-in further reductions as growers/sellers reluctantly move into the new lower trading ranges.

It is time for perspective.

We would all like wool prices to rise.

But before that can eventuate, we need to navigate our way forward through a period of global economic uncertainty not seen since the Great Depression more than 100 years ago.

This event has led to poor international retail consumer confidence.

All markets are driven by sentiment and, currently, our wool export trade is unsettled, hesitant and cautious.

The trading trend has been in a short selling pattern for some time now, as opposed to selling from a stock position.

Spring shearing will soon start and bigger offerings will occur from October onwards - and then add old warehouse surpluses to the mix.

Understand that today's price levels, while marginal, are still profitable and most likely will grind lower into the new season before they recover in the medium to longer term.

History has a habit of repeating itself and possibly we are entering a medium to long-term cycle of wool trading at lower value ranges.

Why not continue to be sellers at these levels, as the alternative may be more costly to your business?

On a positive note, when we get through this cycle and value starts to build, our beautiful, natural, resilient and sustainable fibre is perfectly positioned to recover rapidly and trade beyond the record prices levels we all enjoyed in 2018.

Enjoy the benefits of fantastic seasonal conditions, which allow us to improve sheep and wool growing productivity.

As past generations remind us, there is 'money in mud'.

Our trade tips include giving consideration to: increasing average bale weight up to a maximum 204 kilograms; building networks with your target wool buying markets; asking your wool service provider to explain your wool selling costs; and benchmarking their rates against others.

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