Milestones for wool in 2018

Wool's stellar year for prices, but production continues to decline


Wool
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Prices for wool gave producers a stellar return for their clip in 2018.

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Although Australian wool sales have increased year on year, bales sold have decreased in 2018 showing the effect of the drought on many prime woolgrowing areas.

Although Australian wool sales have increased year on year, bales sold have decreased in 2018 showing the effect of the drought on many prime woolgrowing areas.

In the past 12 months the seasonal conditions gave farmers a run for their money.

But for woolgrowers the commodity provided them with nothing less than a stellar year for the return for their clip, hitting several milestones including prices bursting through the $20 a kilogram mark. 

A combination of high demand from Chinese mills and flat supplies of wool at auction has seen prices roughly double over the past five years.

However with the seasonal downturn came with it the steady decline in volume.

In its latest estimates the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) said wool production during the 2018/19 season will total 385,000 tonnes - down five per cent from an estimate in September of 404,000 tonnes.

Yet the decline in production is anticipated to support prices with the Eastern Market Indicator (EMI) expected to remain steady for the remainder of 2018-19. 

For the period up to the Christmas break, on average almost 9,500 per week or 181,400 fewer bales have been cleared to the trade compared to the same period last year.

AWEX reported that the value of the wool sold was $83.8 million ($1970 per bale), taking the season total to $1550 billion ($2262 per bale). 

Last week ended with the EMI increasing by 13 cents to close at 1862c/kg and in US terms, US1346c/kg. 

The EMI for the finish of the 2018 calendar year finished 126 cents less than at the start of the season, but it is 102c greater than at the end of week 24 last year. 

AWEX market information manager Lionel Plunkett said although wool prices are a fair way below their peak of 2100c cents in August, growers are still seeing some strong returns. 

“The low of the year was back in January and we are well above that, I think it has been a good year in general,” Mr Plunkett said. 

“In the 12 months we are a dollar up, which is positive, although it’s a long way from the high in August, about 250c off the peak.”

The low of the year was back in January and we are well above that - Lionel Plunkett, AWEX market information manager

But at the peak in August, when the EMI hit the highest ever level of 2116c/kg, Mr Plunkett said exporters said it had to “come off”, with the price over-running itself.

Volume wise, Mr Plunkett said season on season the industry is 18pc lower in volume. 

“That should underpin the market with a lot of exporters overseas concerned about supply,” he said. 

Crossbreds have gone through tremendous rises as well as some tremendous falls, he said. 

“There will be more downward pressure on those wool types now because we are coming into the period when it is the peak of the crossbred market in terms of volume,” Mr Plunkett said. 

What has been particularly evident in 2018 is the increase in premiums for non-mulesed wool. 

“It has been a steady rise, but over the last 12 months it has become clearer and we have seen more consistency in those premiums,” he said.

“The last few weeks there has been more than a 100c difference paid on non-mulesed lots.” 

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