Crossbred wool sales volumes up as industry clears stocks

Crossbred wool sales volumes for this season were up by 8 per cent, with Australia on track to sell 46,500 tonnes by the end of June.

The figure likely boosted by stocks built up by producers holding bales back during the volatile period between 2019 and 2021.

While the market is now absorbing the increased supply, Independent Commodity Services market analyst Andrew Woods said it was difficult to see when the pressure might ease.

"There's still plenty of stocks reported around the world," he said.

"It looks like we're working through Australian stocks, but there's South American stocks, Chinese stocks... they've certainly been having selling them.

"In the decade to 2022, the average sales volume was about 36,000 tonnes so it's a big increase."

In addition to the stocks now finding their way to market, Mr Woods said increased production would have added to the volumes sheep producers are seeking to sell.

Crossbred wool prices rose substantially from 2011 before peaking in 2019 and but the gross sales value has now fallen back to pre-2011 levels, roughly half what it was during those stronger years.

Since the 2021 season the supply chain has been comfortable in spending around US$120 million per year on Australian crossbred, with some small variation around this average.

In the last few years the volume sold has ranged from 32,000 to 46,000 clean metric tonnes, with the average price ranging from US358 cents to US257 cents per clean kg.

Even though the gross sales value has essentially been steady, the rising volumes and tight economic conditions around the globe have seen prices pushed down.

Mr Woods said based on previous selling seasons, as much as 13,000 tonnes in crossbred wool stocks could have been built up between 2019 and 2021.

"I think there's a reasonable chance we've cleared most of that stock," he said.

"If supply next year were to fall back to around 40,000 tonnes with the market spending around $US 120 million... that gives a 17pc rise in price basically."

At the recent International Wool Textile Organisation Congress held in Adelaide, New Zealand's Associate Minister for Agriculture Mark Patterson spoke of the difficulties facing the strong wool sector.

"We all know the problems, returns are poor, shearing costs eclipse the income... farmers in the short term are making logical decisions to move into shedding sheep and they are doing so in some number," he said.

"We are on a burning platform but we are not here to wave the white flag."

Mr Patterson said the only way to raise returns for wool was to lift demand, both in traditional areas like carpets and furnishing and in more innovative products.

"Our wool research institute has pioneered the research into breaking wool down into fine granular powders for particles for use in things like cosmetics, pigments and inks and we have recently had a major breakthrough in terms of how fine we're able to get those particles," he said.

"We have reached a threshold in terms of uptakes in dyes and we're getting some major commercial interest."

Mr Patterson said there was also work being done to investigate alternative pathways to market.

"The auction system has not served us well and we've been passive in taking that," he said.

Wool Impact is an advocacy group, created in collaboration between the NZ government and the nation's sheep industry, with the aim of revitalising the sector.

Wool Impact chief executive Andy Caughey said the organisation was trying to build new demand for strong wools.

"Essentially we have to stop selling wool and start solving problems with it, solving problems for consumers and brands," he said.

"We've got 100 million kilograms [of wool production in New Zealand] and what we're looking at doing is decommodifying our clip.

"We are segmenting it into all its different characteristics and properties.

"We no longer want to dilute it and blend it and sell it into a commodity market, we want to build dedicated pipelines through to brands that can recognise and exploit the unique attributes that we have in our wool in its purest form."