Wool market has a year to be remembered

Wool market has a year to be remembered


Wool
IGA Perth Royal Show wool judges Tim Burgess (left), Elders, Graeme Luff, Primaries of WA, Cameron Henry and Matthew Chambers, Landmark and chief judge Tim Chapman, Primaries of WA, with the 2018 Supreme champion fleece produced by the King family, Rangeview Grazing, Darkan.

IGA Perth Royal Show wool judges Tim Burgess (left), Elders, Graeme Luff, Primaries of WA, Cameron Henry and Matthew Chambers, Landmark and chief judge Tim Chapman, Primaries of WA, with the 2018 Supreme champion fleece produced by the King family, Rangeview Grazing, Darkan.

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Take a look back at the wool market from 2018.

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FOR anyone involved in WA’s wool trade, 2018 was a year to remember.

Wool prices peaked briefly at record highs in the previous two years and finished 2017 easing off after a spectacular six-week run, but 2018 was the year records across the entire spread of micron price guides were written and rewritten multiple times in a sustained show of strength.

Two years ago a call from the floor of the Western Wool Centre (WWC) sale room of 1400 cents a kilogram greasy would have signified something special in fleece wool, but in 2018, 1400c/kg was nothing out of the ordinary and a new benchmark price for brokers to aim for with clients’ best lines became 2000c/kg.

The year began with a record-shredding opening two days of auctions at the WWC, which produced the best results for woolgrowers in at least 20 years.

Gross turnover from the sale of 13,287 bales in that first week of trading at the WWC was $28.4 million, the highest weekly turnover since $34.3m in 1997 from the sale of almost three and a half times as many bales.

Average price of a bale of wool sold at the WWC in the first week of 2018 was $2137.80.

Back in June 1997 it had been $757.72.

The two days trading above $14m were the highest individual day turnovers and the combined $28.4m was the highest post-Christmas opening week turnover on the Australian Wool Exchange (AWEX) database, which archives wool sales information back to 1995.

Over subsequent weeks the auction pass-in rate climbed steadily into double figures as wool buyers resisted higher prices and gradually the prices came off the boil, apart from the Merino cardings price which plummeted.

It set a record in the last week of January for the biggest cardings price drop since 1997, falling 184 cents in two days at the WWC and erasing three months of steady gains.

Australian Wool Testing Authority (AWTA) statistics from its Perth laboratory for the season to the end of January indicated the exceptional prices for cleared stored stocks of finer specialist wools from farm sheds and woolstores during December and January.

The statistics showed the volume tested of 16.5 micron or finer wools appraised as Australian Superfine (ASF) Merino increased by a massive 142.7 per cent over the same period the previous season, to top 615 tonnes.

The increase for 16.6-17.5 micron ASF wool tested was almost as remarkable but on significantly larger volumes.

In February, East Pingelly farmer and WoolProducers Australia (WPA) director John Hassell was the only WA representative appointed to the Australian Wool Innovation (AWI) WoolPoll 2018 panel.

The 11-member panel’s job was to endorse voting documentation and processes for the September poll to determine how much woolgrowers will contribute towards the cost of AWI’s operation via a levy on the sale price of their wool for the three years from July 1, 2019.

A Co-operative Research Centre for Sheep Industry Innovation (Sheep CRC) report estimated studs registered with MERINOSELECT and using Australian Sheep Breeding Values were supplying 47 per cent of Merino sires for commercial flocks in Australia.

This compared with an estimate of only 18pc in 2014.

Jumbuk Shearing's Tom Reed cuts Brad Phillip's hair and beard at the 'Shearing for Liz' pink shearing day at the Davies family's Yorkrakine shearing shed. The day in April raised $32,000 for the National Breast Cancer Foundation.

Jumbuk Shearing's Tom Reed cuts Brad Phillip's hair and beard at the 'Shearing for Liz' pink shearing day at the Davies family's Yorkrakine shearing shed. The day in April raised $32,000 for the National Breast Cancer Foundation.

WA participants Stephen Chappell, Lake Grace, Daniel Dempster, Goomalling, Kyle Gumprich, Narrogin, Justin Haydock, Narrogin, Alex House, Claremont and Carl Storer, Cunderdin, joined 17 other potential future wool industry leaders in South Australia for a breeding leadership course.

The week-long biennial course funded by AWI, was designed to improve the leadership skills of young people involved in all aspects of the industry, from farming to education and wool marketing.

After a three-week spell in the doldrums, wool prices at the WWC returned to record breaking.

The Western Indicator (WI), a guide to the general strength of the local market, outstripped other AWEX indicators to smash through the 1900c/kg clean ceiling for the first time.

AWEX market information manager Lionel Plunkett said the 21 and 22 micron price guides had also never been higher in WA.

In March, Agriculture and Water Resources Minister David Littleproud revealed AWI and its performance and governance mechanisms would be scrutinised by an independent investigation.

Mr Littleproud said the investigation would look at additional items of concern as part of the normal statutory review ahead of a three-year WoolPoll.

Ernst & Young (EY) were appointed the following month to conduct the review and called for submissions from the wool industry.

Broader micron Merino wools continued to benefit from a magic carpet ride of resurgence through March with 21 and 22 micron price guides resetting records.

AWI officially launched the first phase of its WoolQ digital information and sales platform in March with the release of its eSpeci tool, a digital record of in-shed wool clip data at shearing time.

Some WA woolgrowers had the chance to see their 19 micron Merino wool worn as high fashion garments on the catwalk for the second year in a row at the Make Smoking History Wagin Woolorama.

Models displayed a range of garments created from WA wool through an association between major Chinese processor Sunshine Textiles and Peter Scanlan Wools, at fashion parades in the Woolorama wool pavilion.

Woolgrowers need to produce more wool was the clear message Andrew Rintoul, Dongiemon and Tilba Tilba Merino studs, Williams, had after he returned with an AWI-organised tour of China.

“Their (Chinese wool processors and garment manufacturers) major concern is supply going forward,” Mr Rintoul said.

“They are not so concerned about price, with the massive investment they have put into processing wool they want to know that their supply into the future is secure.

Autumn shearing at Rawlinna station produced 1500 bales of wool.

Autumn shearing at Rawlinna station produced 1500 bales of wool.

“They just want us to produce more wool.”

Into April, Rural Bank’s Australian Wool Annual Review and the Australian Bureau of Agriculture and Resource Economics and Sciences (ABARES) quarterly commodities review both predicted sheep farmers would enjoy their best farm cash incomes for 20 years, primarily because of high returns from wool.

Both reports also predicted high wool prices would continue and would be aided by favourable exchange rates.

The largest pastoral shearing operation in Australia on Rawlinna station was completed in April after 10 weeks and a major logistical exercise to get 64,000 Merinos through the 16-stand shed and their wool shorn, classed and pressed into 1500 bales.

At more than a million hectares, including part of the Nullarbor Plain, Rawlinna is operated by the Jumbuck Pastoral company.

An annual pink shearing fundraiser ‘Shearing for Liz’ hosted by Quentin and Dianne Davies, in the Yorkrakine family farms’ shearing shed, raised $32,000 for the National Breast Cancer Foundation.

The fundraiser was started by Jumbuk Shearing’s Tom Reed and wife Lucy after a close friend Liz Roberts died in 2014 after a long battle with breast cancer.

Strong demand and dwindling supplies pushed 21 and 22 micron price guides on to further new records in April and this time the WI joined them with a new all-time high of 1934c/kg clean.

In early May brokers’ predictions of wool supplies being very thin towards the season end were proved correct by AWTA statistics showing the number of bales tested was dropping off rapidly.

Most of the wool that would normally be sold at the WWC in May and June had already been sold to take advantage of high prices, so the subsequent shortage drove prices across the micron range to record highs three weeks in a row.

The WI broke through the $20 a kilogram notional barrier for the first time ever in the middle of May and the average bale of wool sold at the WWC that week was worth $2175.08 cents.

By the end of May, the WI had moved beyond 2100c/kg.

Despite the record prices, there were seven days in May and June when no auctions were held at the WWC simply because there was insufficient wool available.

Murdoch University School of Veterinary and Life Science and the WA College of Agriculture’s Cunderdin, Harvey and Narrogin campuses each had teams representing WA at the national Merino Challenge in Adelaide.

They were assessed across a range of skills areas such as feed budgeting, condition scoring, breeding objectives, wool harvesting and commercial assessment and classing of animals and fleece.

Year 12 WA College of Agriculture, Cunderdin, student Georgia Daws, Yealering, competing at the National Merino Challenge in Adelaide in May.

Year 12 WA College of Agriculture, Cunderdin, student Georgia Daws, Yealering, competing at the National Merino Challenge in Adelaide in May.

AWEX chief executive officer Mark Grave visited Perth in June to talk to woolgrowers and wool brokers about a trial of 50,000 electronic bale tags to be conducted through the WWC selling system.

AWEX’s eBale and WoolClip software program are expected to compete with AWI’s eSpeci tool and WoolQ digital platform.

The 2017-18 wool season ended with a swathe of wool price records set and reset on the days the WWC did trade during June.

On the second last trading day of the season all micron price guides and the WI set new records and on the last day the 21 and 22 micron guides and the WI moved further ahead on a small offering of just over 4800 bales for the week.

The WI finished the season at 2243c/kg.

Into July and at the start of a new wool season, prices took a dive in the two trading weeks before live auctions stopped for the annual three-week recess.

Attention swung away from wool prices when Mr Littleproud released EY’s report on AWI’s performance and governance with 82 recommendations he said he expected AWI to adopt.

Key recommendations sought to improve AWI’s strategic planning, communication with stakeholders and stakeholder engagement.

They also proposed moving to a skills-based board, limiting board member tenure to 10 years maximum and improving transparency in relation to proxy votes.

With wool auctions still in recess into August, the wool growing region of Williams became a focus with a community event and fashion show at the Williams Woolshed to mark the beginning of a unique partnership.

Wool supplied by seven Williams woolgrowers would be quarantined under Australian Wool Network’s and Dyson Jones’ Direct Network Advantage (DNA) program and processed and manufactured into a range of garments for sale at the Williams Woolshed.

Short videos able to be accessed via electronic garment tags by customers using their mobile phone, will tell the back story of Williams and its woolgrowers.

The second week back after the three-week recess and short supply restricted auctions at the WWC to one day, but what a day.

Wednesday, August 15, saw the WI jump 121c, its biggest one-day rise in 16 years, to the still current record price of 2279c/kg clean and all price guides from 18 to 21 micron fleece set new records of between 2357 and 2580c/kg clean.

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Over successive weeks into September, the 18 and 18.5 micron price guides continued to climb to their current records of 2638 and 2538c/kg respectively, but the remainder of the fleece wool price records set on August 15 still stand.

Within hours of AWI releasing the range of voter options for WoolPoll 2018, they were labelled “biased” and “disappointing” by WPA and WA’s WoolPoll panel representative Mr Hassell, because AWI’s preferred 2pc levy option was right in the middle of the range.

The other levy options offered by AWI were a mandatory 0pc, 1.5pc, 2.5pc and 3pc.

The 1.5pc levy was ultimately chosen by a majority of woolgrowers, as the first reduction in the wool levy following a supporting campaign by lobby groups including WAFarmers.

A return after two years to entering fleece for the IGA Perth Royal Show paid off for Darkan’s King family, Rangeview Grazing, with the 2018 Supreme champion fleece award.

From a stud Superfine Poll Merino ram, the fleece scored 96 out of a possible 100 points.

Wool prices continued to fluctuate week-to-week through October, albeit at a high level and there were opportunities to capitalise as Mike and Erma Morrissey, Westbrook Merino and Poll Merino stud, West Dale, demonstrated when they sold a one-bale special lot of ewe hogget wool averaging 13.9 microns for 3090c/kg greasy or better than $43/kg clean.

After more than three decades trading wool as Peter Scanlan Wools, Peter and Margaret Scanlan activated a succession plan and devolved shares in the business to their five daughters and three senior staff members.

The business became Scanlan Wools Pty Ltd.

Ahead of the November annual general meeting AWI’s Wal Merriman, one of the best known faces in the national wool industry, announced he was stepping down as chairman after 10 years but would remain on the board which he first joined in 2004.

Brad Faithfull (left), Westcoast Wool & Livestock, South Kellerberrin woolgrowers Valecia and Murray McDonald, Westcoast Wool & Livestock auctioneer Danny Ryan and Australian Wool Exchange staff Nicole Vezich, technical controller Andrew Rickwood and Diana Taylor, were all smiles after a record-setting first trading day of the year at the Western Wool Centre.

Brad Faithfull (left), Westcoast Wool & Livestock, South Kellerberrin woolgrowers Valecia and Murray McDonald, Westcoast Wool & Livestock auctioneer Danny Ryan and Australian Wool Exchange staff Nicole Vezich, technical controller Andrew Rickwood and Diana Taylor, were all smiles after a record-setting first trading day of the year at the Western Wool Centre.

The AWI board chose deputy chairwoman and the only board member with extensive retail and fashion garment marketing experience, Colette Garnsey, as Mr Merriman’s successor.

Later the AWI annual general meeting formally accepted the WoolPoll 2018 levy reduction result.

Of the 13,506 votes received and following allocation of three rounds of preferences, 52.82pc voted in favour of a 1.5pc wool levy for the next three financial years and 47.18pc voted to retain a 2pc levy.

Ms Garnsey told the meeting AWI needed to “do more” to earn and retain the trust and confidence of woolgrowers.

She said 75 of the 82 EY recommendations were in various stages of being implemented, but seven which related to aspects of AWI’s constitution would be put to a vote of shareholders at an extraordinary meeting in March.

AWI’s annual report forecast a $13.4m operating loss for the 2018-19 year, a $29m trading turnaround from an operating surplus the previous financial year.

Into December woolgrowers and brokers waited patiently for the pre-Christmas price and demand spike that had been a feature of December trading the previous couple of years as buyers looked to secure enough wool to get through the annual three-week Christmas and new year WWC shutdown.

But the surge came only on the last two days of trading.

It seemed some of the major buyers for Chinese woollen mills and processors had learned from past experiences and quietly built stockpiles before December, enabling them to sit out of the final auctions for 2018.

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