Australia's wool production is booming, but challenges lay ahead

Kristen Frost
By Kristen Frost
May 1 2022 - 8:30pm
GOING UP: The Australian Wool Production Forecasting Committee have estimated that the national wool clip this year will churn out 314 million kilograms (Mkg), compared to 294 Mkg from the previous year.

Australia's shorn wool production is starting to boom again with another steady rise of 6.5 per cent forecast for the year.

But experts are warning logistical challenges in the wool supply chain may dampen the industry's ability to move Australia's top fibre offshore.

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The Australian Wool Production Forecasting Committee (AWPFC) have estimated that the national wool clip this year will churn out 314 million kilograms (Mkg), compared to 294 Mkg from the previous year.

The lift is based on improved seasons, subsequently better weaning rates and wool production per head.

In New South Wales, the largest state for wool and sheep numbers, production is estimated at 103.9 Mkg - an increase of 4.7pc.

Victoria is marked for 74.4 Mkg up 6.2pc, South Australia 53.9 Mkg or 4.7pc, Western Australia 62.3 Mkg rising 10.3pc, Tasmania 10.5 Mkg up 11.7pc and Queensland is forecast to produce 8.7 Mkg rising 20.8pc.

Newly appointed AWPFC chairman Stephen Hill said there are significant lifts in production across the states.

"NSW and VIC are nice and steady with increases in fleece weights and shorn numbers," Mr Hill said.

"In WA interstate transfers and sheep slaughter have returned to normal levels, indicating a rebuild in their sheep flock. It wasn't so long ago when their season wasn't so good, they were moving sheep from west to east.

"QLD have had a pretty patchy season with areas from drought to flood, even though they have the greatest increase year on year, they have the greatest uncertainty."

Overall, Mr Hill said the results were "uniform", as graziers chose to retain older ewes, and the good season brings with it higher fleece weights, better production, and better lambing percentages.

At the processing end, this positive figures will be well received where there has been recent concern surrounding the lack of high quality Merino wool.

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But in reality, 314 Mkg has to be sold at a time when wool buying at auctions my be hindered by very real and damaging supply chain disruptions, in particular by Chinese companies.

And except for fine wool types, compared to competing fibres, Mr Hill said wool is underperforming.

"There is no problem with demand, but the market would be better if the industry wasn't faced with the slow pipeline," he said.

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"Cotton is at record levels and man-made fibres are ticking along as well.

"There is a gap there that we need to close, even at the coarse end of the clip which is at very low levels and doesn't look like there will be any recovery around the corner for those types of wools.

"The medium Merinos should be higher and could be higher and I think it's really around the logistic side of things."

He said exporters only have a limited capital working base; they try and turn that so many times during the year.

As well as shipping delays there are reports of dumping delays of up to seven weeks

"If the money is not coming back quickly, and it doesn't in these situations, with delays in shipping and dumping, that just takes that money out of the industry or takes it a while to come back and it has a negative impact on the market.

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"So the problem is filling the orders and turning the finance and getting it back into the room to execute orders."

Head of ANZ Agribusiness Insights Michael Whitehead said going forward, the industry should expect wool prices to be steady rather than spectacular.

"In the past, the industry may have been looking at prices rising at this time of the year as supply becomes tighter globally and Chinese mills would ordinarily be starting to increase their buying, planning to process the wool which would be manufactures into garments for the Northern Hemisphere winter," Mr Whitehead said.

"However, given parts of China are currently locked down, as well as wider disruptions across the wool supply chain in China, that demand is likely to be reasonably muted this year."

He said while processing and manufacturing will continue, the delays and disruptions will effect both ends of the supply chains - less upwards price pressure for Australian wool and less fine woollen clothing on European and other Northern Hemisphere shelves later in the year.

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Kristen Frost

Kristen Frost

National Sheep and Wool Writer

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