Renewed overseas interest in wool as prices drop

Renewed overseas interest in wool as prices drop

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There is renewed interest coming from wool users across the world who had removed themselves from the market when prices were at record highs.

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Fox & Lillie Rural technical and marketing manager Eamon Timms says there's been renewed interest in Australian wool from overseas.

Fox & Lillie Rural technical and marketing manager Eamon Timms says there's been renewed interest in Australian wool from overseas.

While the state of the Australian wool market isn't overly positive at the moment, there is renewed interest coming from wool users across the world who had removed themselves from the market when prices were at record highs.

Fox & Lillie Rural technical and marketing manager Eamon Timms said he had received enquiries from an American clothing brand and a European fabric maker, who were both interested in buying Australian wool in the future.

"[We had an enquiry from] a European wool user who had not been using wool while it had traded at the levels of the last two seasons," Mr Timms said.

"And an American company that only has wool as a small proportion of wool in the clothing range contacted Fox & Lillie and is looking at the price of wool and doing their forward planning for the coming seasons and anticipating an increase in wool for their knitwear and for the woven fabrics."

And he said there would be others in a similar situation.

"There will be others on the sidelines who will be sitting back and doing their calculations for the next season or two," he said.

He said this was a big silver lining in an otherwise very challenging time.

"When wool had been trading at historically high levels these last two seasons, they weren't able to make the fabrics out of wool and be competitive, and now with the change in values, they're starting to do their equations and believe they can make fabrics out of wool and sell them and it be a viable proposition for them," he said.

He said while these signals were great for the future of the wool industry, they wouldn't help improve prices in the short term.

"These signals are good for increasing wool's share but these factors are not immediate demand drivers and such factors will not drive up prices in the short term but medium term these and others will bring new business to wool and be beneficial," he said.

READ MORE: Wool prices rise but it's not a sign of a changing market

He said the industry still had some significant challenges ahead of it.

"We haven't seen everything play out in relation to the amount of retailers and brands that will not survive this [COVID-19] crisis," he said.

"Also, it's been such a huge season so we're going to see a much bigger wool cut in spring; the wool cut per head for a lot of eastern Australia will be significantly higher than it has been for many years, so there is going to be plenty of supply coming onto the market."

When asked whether he thought this interest meant current prices would be more sustainable moving into the future, Mr Timms said it was probably an indication that the historic highs wool had been trading at had kept a number of players out of the market.

"And since prices stepped down so significantly, people are anticipating that we won't go back to the historic highs in the next year or two," he said.

He said the sustainability benefits of wool would help into the future.

"A lot of people are thinking that even after the crisis, sustainability issues which are becoming increasingly more prominent, will not fade, and that plays really well into the story of wool," he said.

Mr Timms said these were very encouraging signs for the future usage of wool.

"We still have challenges ahead of us but we can look to the future with some renewed interest because this will drive demand eventually when things get sold in the retail side of things and we can look forward to more people coming back to wool," he said.

"We're all looking for signals for the future of the industry and these certainly are signals that we have got a good future but we just have to be mindful of the immediate challenges ahead of us."

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