WA wool stocks looking better than east

Seasonal conditions and high sheep turn-off rates will impact on wool volumes across Australia, the Australian Wool Production Forecasting Committee (AWPFC) has predicted.

But those factors will have less impact in WA than in New South Wales and Victoria, the two States producing more wool, according to the latest AWPFC report.

As well, decisions on the future of 50,000 to 60,000 sheep reputed to be out in the WA Wheatbelt cleaning up stubble and weeds after harvest, may help offset wool production losses in other areas of the State.

The Great Southern region, which usually produces the largest volume of wool, experienced an exceptionally dry year last year which has hit production quantity and quality.

According to industry sources, the Wheatbelt sheep were quietly snapped up late last year by canny farmers after demand and prices for spring replacement stock tapered off more quickly than expected at Katanning and other saleyards due to water and feed shortage concerns.

Some were trucked towards Geraldton and some went out into the central and eastern Wheatbelt, according to the sources.

Good summer rains sweeping through on the tail of far-north tropical low-pressure systems could see those sheep retained, mated and going through shearing sheds later in the year rather than onto trucks to abattoirs or live export ships.

Potential for that wool to come onto the WA market was not considered at the time the AWPFC report was prepared, the sources said.

When the AWPFC revised its production estimate just before Christmas, it made it clear the forecast decline for the current season is likely to be greater than previously expected.

As reported in Farm Weekly on December 24, the AWPFC predicted national wool production for 2015-16 will decline by seven per cent to 322 million kilograms greasy.

It said this reflected an expected 4.8pc fall in shorn sheep numbers to 73.3m and a 2.3pc drop in average fleece weight to 4.4kg.

The predicted 7pc decline follows six seasons of relatively stable national annual wool production of between 340 and 350mkg, the AWPFC's third forecast for the season stated.

It quoted Australian Bureau of Statistics figures showing national adult sheep and lamb turn-off for slaughter and live export at just over 8m in the July-September first quarter of the season.

While this was 3pc lower than for the same quarter the previous season, it was also 13pc – or more than 7100 sheep – more than the average turn-off over the past five years.

Committee chairman Russell Pattinson summed up the situation.

"Seasonal conditions in a number of the major sheep producing regions in Australia have been drier than expected over spring which has resulted in lower fleece weights and, more recently, reports of increased sheep turn-off," Mr Pattinson said.

"Victoria, Tasmania, the south-east and north-west of South Australia, and the Great Southern region in WA have all experienced difficult seasons.

"Among other things this has caused problems with stock water availability.

"The major sheep regions of Queensland continue to see very tough conditions and the sell-off of sheep continues in that State.

"Even in NSW, there are areas where seasonal conditions have been more difficult than expected.

"These tough conditions are only being partially offset by good to very good conditions in north-eastern South Australia and parts of NSW," he said.

While a decline in wool production is forecast in WA, the situation is not as dire as in most other states.

Queensland's wool industry, for example, is facing a 39pc drop to its lowest level of wool production on record at just 5.6mkg, according to the AWPFC.

In relation to WA, it noted seasonal conditions in the Great Southern, lack of substantial rain to replenish farm dams, stock sell-off by producers and the probability fleece weights will be further reduced during the second half of the season.

"In the first five months of the 2015-16 season, the volume of wool tests fell by 2.2pc (compared to a national average down 7.2pc)," the AWPFC's forecast for WA stated.

"Shorn sheep numbers are expected to be lower than previously anticipated, with a 1.9pc decline, and average wool cuts per head are predicted to be 3.2pc lower than in 2014-15," the forecast stated.

But wool production in NSW and Victoria is predicted to decline more, down 7.1pc in both States, to 120.8mkg in NSW and 67.5mkg in Victoria, due to dry seasons, even bigger turn-offs and producers spooked by talk of extended El Nino weather patterns.

Tasmanian wool production is forecast to fall by 10.3pc to 9.7mkg after an exceptionally dry year and the AWPFC admits this prediction may ultimately prove to be "conservative".

South Australia, the State predicted to be least affected by the contraction, is forecast to back up a bumper 2014-15 season with only a 3.1pc decline to 54.8mkg.

This week the Australian Wool Testing Authority (AWTA) released statistics for December and its latest season-to-date statistics generally support the AWPFC forecasts, except for WA.

In WA, in December, AWTA tested 29,092 bales, an increase of 1.2pc over December 2014.

Bale test numbers in Tasmania and NSW jumped by about 10pc but this was interpreted as strong December prices dragging old wool out of store rather than indicative of on-going production levels.

In WA, wool prices spiked just before Christmas, 2014, so the comparison between the seasons was considered valid.

December test numbers in other States declined.

More meaningful were the July-December progressive first-half season comparisons which showed bale numbers and total weight - 177.1mkg - declined 6.4pc and 6.1pc nationally so far this season compared to the previous season.

However, the bale numbers decline in WA - down 1.9pc to 194,821 bales at an average weight of 176.8kg - was significantly less than the rate of decline in other States.

Bale numbers tested in NSW dropped 7.9pc to 299,049, in Victoria dropped 7.1pc to 343,142 and were down 3.6pc to 114,598 in SA.

They plummeted 13.4pc in Tasmania to 27,972 and 14.8pc in Queensland to 18,541 bales tested.

Australian Wool Exchange (AWEX) December auction statistics also confirmed this season's contraction is having less impact in WA than in NSW and Victoria.

Auctions at the Western Wool Centre (WWC), Bibra Lake, and in Melbourne and Sydney, account for sale of about 90pc of the national clip.

In the first half of this season, 16.3mkg of wool was offered for sale for the first time at the WWC, down 0.5mkg or 2.9pc on the first six months of last season, according to AWEX.

By comparison, first-offering statistics for Melbourne auctions show a decline of 5.2mkg, or 9.9pc, to 47.9mkg and for Sydney a decline of 2.7mkg, or 9.3pc, to 26.7mkg in the same period.

Total offerings statistics show a similar correlation, with the reduction at the WWC about half of that at Melbourne and Sydney, while the decline in the number of bales offered at the three centres also matched the weights correlation.

Primaries wool manager Greg Tilbrook is one who believes the wool season in WA is holding its own.

"Water's tight but there's feed available at the moment with a lot of pinched grain and a lot of screenings this harvest, so there is some grain in the paddocks for sheep," Mr Tilbrook said.

"Apart from the stubble, there's also some green pick - the sheep do a pretty good job of cleaning up the weeds.

"I was talking to one client who doesn't run sheep and he said he spent New Year's Day spraying.

"I think this season is not going too badly.

"(Sheep and wool) numbers are still on the decline.

"There's been a big turn-off through that Great Southern area that usually produces a lot of wool - but I think the real impact of that could be felt further out - next season rather than this season.

"The million-dollar question though is what will happen to sheep out in the Wheatbelt that are there doing a job at the moment?

"Those sheep are still in the mix.

"Will they be shorn, mated and remain in the system, or will they be turned off for processing or live export?

"That decision will have an impact on the wool industry here in the longer term.

"My advice to anyone who has got sheep with 60 millimetres or more wool on them is to put them through the sheds before they consider doing anything else.

"With the wool market the way it is at the moment and the demand for shorter staple-length wools, you'll make money on it."