Speculative demand to keep machinery running is helping wool values stay afloat

Partial price recovery buoys the trade

Wool
Higher values are flushing wool out of grower stocks and into the market.

Higher values are flushing wool out of grower stocks and into the market.

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Exporters help to push wool values up as processors seek stocks.

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Cautious optimism confronts our global wool market as exporters push prices higher - to levels not seen since the COVID-19 virus decimated values from March 2020.

Demand can be interpreted as speculative, and is more than likely being fueled by the need to source raw materials to fill the early stage processing sector.

The partial price recovery is encouraging, and confidence seems to be building in anticipation of more upside after the global coronavirus vaccination roll-out.

Economic barriers remain in our main wool consuming countries, though, as retail demand remains low.

Recent higher prices are enticing growers who have stock to offer their wool into the market.

Sale volumes on offer to exporters have, therefore, increased - yet prices continue to rise.

This is a very positive signal, as stocks are eroding.

China is leading the charge, and dominating purchases in all categories. It is buying in anticipation of future wool top and yarn orders.

The forward markets have been reignited and are responding with financial wool contracts being written, and available out until the middle of 2022 at near to spot levels.

If you are a risk-adverse woolgrower, perhaps consider consulting with your broker and locking some of your production away to manage any potential downside risk.

Prices for 19-micron wools are now trading higher than 1070 cents a kilogram (greasy), or 1600c/kg (clean), and 21-micron types are about 870c/kg (greasy), or 1300c/kg (clean), based on 67 per cent yield.

By locking away a percentage of the clip, wool producers can concentrate on achieving maximum on-farm production - knowing the price is fixed.

Due to incredibly strong meat prices and improved wool prices, it is great to see financial investment returning into our farms.

We can report plenty of new shearing sheds are being built across our region, and much-needed amenity and stockyard upgrades are underway.

Our workplaces need to be safe and compliant for sheep and staff, and now is a great opportunity to improve handling and harvesting infrastructure.

Shearers and shed staff are attracted to sheep and wool properties with modern or upgraded facilities, as these operate more productively and reduce injury to staff and livestock.

This contributes to more social contentment, which leads to more profitable workplaces.

Higher quality standards are then delivered for wool and meat, along with improved shearing safety - long into the future.

Fantastic widespread summer rains have delivered timely summer pastures and a green-pick among stubbles.

Growers now have the ability to run and fatten more stock and, with mutton underpinning the meat industry now trading upward of 650c/kg, we are all excited about the outlook.

This summer has been without major heatwaves, to date, and stock continue to thrive on quality water from above average 2020 rainfall.

It would be hard to recall a healthier year for wool production, with yields and fibre staple strength well above that in average seasons.

The whiteness and nourishment in the wool is also evident and on display for buyers.

Growers continue to report increased wool cuts per head, which is softening the blow of lower prices.

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