Status quo tipped for wool production

The Australian Wool Production Forecasting Committee on Friday predicted wool production will be 325 million kilograms greasy for both the 2015-16 and 2016-17 seasons.

In doing so, the committee reassessed its April prediction for the 2015-16 season and raised it slightly to 325mkg on the basis of the latest statistics from the Australian Wool Testing Authority (AWTA), Australian Wool Exchange (AWEX) and other market indicators.

Its latest prediction for 2015-16 is a 6.1 per cent decline in production from the 2014-15 level.

The committee said this predicted decline was due to the cumulative effects of national shorn-sheep numbers dipping 4.6pc to 73.4m and a lower average wool cut, down 1.6pc to an average of 4.43kg per head.

But the committee predicted better conditions across Australia this season would see the average wool cut come back up by 1.7pc to 4.5kg a head.

This increased cut will offset a further predicted 1.6pc year-on-year drop in shorn-sheep numbers to 72.2m this season, it said.

The committee estimated the national sheep flock will number 68.4m by the end of this season, compared to an estimated 70.9m for the past season and 72.6m for 2014-15.

"After an extended period of dry seasonal conditions in many major sheep producing areas, there have been extensive rains since May which have brought vastly improved seasonal conditions and prospects for 2016-17," said committee chairman Russell Pattinson.

"Many regions are reporting excellent conditions, which are expected to result in better average wool cuts per head in 2016-17.

"However, for some States, this improvement is unlikely to become evident until summer and into autumn 2017 as spring shearing will have been affected by the dry conditions up to autumn this year," Mr Pattinson said.

He acknowledged lower opening sheep numbers would be the key influence on wool production this season.

Very dry conditions in the western half of Victoria, south-east South Australia, Tasmania, parts of NSW and throughout Queensland for much of the past season had resulted in continued turn-off of sheep and lambs across much of Australia.

While those decisions will mean fewer sheep shorn in those areas this season, the improved seasonal conditions are expected to see producers retain more sheep, Mr Pattinson said.

The committee's estimate of a 6.1pc fall in past season wool production is less than the 7pc drop in the weight of wool tested by AWTA in 2015-16, but it said this was due to an increase in wool tests, receivals and auction offerings late in the 2014-15 season.

A recent-record run by wool prices near the end of the 2014-15 season had drawn out wool held on-farm and inflated wool test figures for that season, but was not replicated in the past season, it indicated.

The committee said its estimate for the past season was in line with a 5.9pc decline in first-hand wool offered at auction that AWEX reported.

It noted that for the season so far, AWTA test data showed a significant increase in the weight of wool 16.5 micron and finer and no change in the volumes of 17 micron wool.

But there was a decline in the volumes of wool for all other micron ranges and a significant drop in wool volumes between 21.6 and 23.5 microns, it noted.

The mean wool fibre diameter in the past season was 21.0 microns, the same as 2014-15.

Shorn wool forecasts for WA and other States will be available in the committee's report published on the Australian Wool Innovation website at www.wool.com/forecasts from August 31.

The Australian Wool Production Forecasting Committee draws on advice from State committees which include woolgrowers, brokers, private treaty merchants and representatives from State agriculture departments.

Data and input is also drawn from AWTA, AWEX, wool exporters, the Australian Bureau of Statistics, ABARES, and Meat and Livestock Australia.