Wool clip set to reduce despite prices

Wool clip set to reduce despite prices


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WA's wool production this season is expected to continue a trajectory of steady decline, exceeded only by the drop in production in drought-affected States.

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WA's wool production this season is expected to continue a trajectory of steady decline, exceeded only by the drop in production in drought-affected States.

A 7.2 per cent year-on-year decline in WA's 2018-19 shorn wool production was forecast by the Australian Wool Production Forecasting Committee (AWPFC) recently.

Its forecast production of 60.4 million kilograms of greasy wool in WA this season is despite current wool prices being some of the best since deregulation of the industry 28 years ago acting as an incentive for woolgrowers to maintain flock numbers.

The AWPFC's final production estimate for WA's 2017-18 season production was 65.1mkg, an 8.4pc drop from 71.1mkg in 2016-17.

The forecast continued decline in current season production came at the same time as updated Australian Wool Exchange (AWEX) statistics showed three-year price points of between 86.3pc and 94.2pc for 18.5-22 micron price guides and 81.1pc for the Western Indicator (WI) as a general guide to the strength of the WA wool market.

The AWEX price point statistics mean that prices at the Western Wool Centre (WWC) over a spread of micron wools and the WI has only been above current levels for less than one week in five over the past three seasons, covered by AWPFC production estimates and forecast and that includes AWEX records set for all micron price guides and the WI within the past 12 months.

But the decline in WA production this season is dwarfed by the forecast impact of drought on wool production in New South Wales, with the major wool producing State hit hardest by a lack of rain.

The AWPFC forecast for NSW-shorn wool production this season was a drop of 20.4pc year-on-year to 100mkg - down from an estimated 125.7mkg last season and 126mkg in 2016-17.

Production in South Australia, the other major wool producing State impacted by drought, was forecast by the AWPFC to drop 10.9pc to 53mkg this season following an estimated 2.8pc production increase last season, to 59.5mkg from 57.9mkg in 2016-17.

The AWPFC forecast production in Victoria - mixed sheep and grains farmers in the north of that State were impacted by drought - would ease 6.5pc this season to 68.7mkg, following a 9.1pc jump to 73.5mkg last season and still above 2016-17's 67.4mkg.

Mainly as a result of the big production hits expected in drought States, Australia's total wool clip this season was forecast to slide 12.7pc, from 341mkg to 298mkg, reportedly its lowest level in more than 90 years and roughly two and a half times less than what it was 30 years ago when the national Merino flock numbered about 160m.

The AWPFC forecast national shorn sheep numbers this season will be down 7.3pc from 76.8m last season to 71.2m and the average wool cut per head will also decrease because of drought - from 4.4kg last season to 4.2kg this season.

The AWPFC's first forecast for the 2019-20 season predicted further declines of 4.5pc for both national shorn sheep numbers and wool production.

It predicted shorn sheep numbers will drop to 67.9m and the 2019-20 clip will total 285mkg.

It's first forecast for 2019-20 assumes a return to normal seasonal conditions.

Committee chairman Russell Pattinson said ongoing drought conditions across large parts of Australia continued to force farmers to sell sheep.

"To the end of January 2019, there has been a 25 per cent increase in the adult sheep slaughter numbers compared with the same period a year earlier," Mr Pattinson said.

"Along with a reduction in greasy wool production there has also been significant changes in key test parameters, a further reflection of ongoing dry conditions.

"Average yield, which currently stands at 63.8pc, is at its lowest level in eight seasons while the mean fibre diameter of the national clip is 0.5 microns finer than at the same time last season.

"There have also been considerable reductions in staple length, staple strength and vegetable matter."

The AWPFC noted welcome rains has fallen across many key wool producing areas during the last week of March, but recognised follow-up falls will be necessary.

It said wool producers recognised the value of their breeding ewes and are intending to hold numbers where possible.

The AWPFC acknowledged the impact of the drought would continue into the new season due to reported low scanning and lambing percentages in 2018-19.

It also said it noted that for the current season to March, Australian Wool Testing Authority (AWTA) test data showed a significant increase in the weight of wool tested of 17.5 microns and finer, as well as a decline in the volume of 18.6 to 24.5 microns wools and 26.6 and broader.

The AWPFC drew on advice from six State committees, each including growers, brokers, private treaty merchants, State departments of agriculture representatives and AWTA.

It also had input from AWEX, wool exporters, the Australian Bureau of Statistics, Australian Bureau of Agricultural and Resource Economics and Sciences and Meat and Livestock Australia.

State and national forecasting committees next meet in August.

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