Processors yet to adjust expectations

Processors yet to adjust expectations

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As a result, there was only limited demand for low-yielding wools.

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CHINESE wool processors not yet adjusting seasonal yield expectations for Western Australian fleece is contributing to soft demand, Westcoast Wool & Livestock auctioneer Danny Ryan has pointed out.

Chinese processors usually "taper their yield specification" towards the end of the season, Mr Ryan explained, but with the COVID-19 pandemic and logistics problems moving wool about in China over the past two months, processors have not yet "adjusted" their specification.

Westcoast Wool & Livestock auctioneer Danny Ryan.

Westcoast Wool & Livestock auctioneer Danny Ryan.


As a result, there was only limited demand for low-yielding wools and those that did sell were "discounted by as much as $1.50 (a kilogram)", he said.

The amount of clean fibre, determined at a standard moisture content, remaining after greasy wool is washed in early stage processing is the yield, displayed as a percentage.

Expected yield can be calculated in a number of ways after a test on a sample of greasy wool.

Buyers at the Western Wool Centre (WWC) filling orders for Chinese processors bid on greasy wool based on an expected clean wool yield.

Australian Wool Exchange (AWEX) quotes clean wool prices calculated from auction greasy wool prices using the Schlumberger dry yield method, but Chinese processors use a different method.

Further complicating the process is a seasonal variation in expected yield.

Because the bulk of WA's clip is now autumn shorn, it usually contains higher levels of dust, sand and vegetable matter trapped in the longer fleece over dry summer and early autumn months, than spring shorn wools which usually have some dust and dirt washed out by winter rains.

As a consequence, autumn shorn WA wools in an average season generally have lower quoted yields than spring shorn wools and in a dry season all yields usually decline.

As bigger volumes of WA wool hit the market in autumn, Chinese processors have in the past relaxed their yield specification because greater selections on offer made it easier for their buyers to average the target yield.

But not this year, according to Mr Ryan.

"Chinese processors usually taper their yield specification a bit towards the end of the season, but part of our (woolgrowers' and brokers') problem with the market at the moment is that the Chinese processors haven't adjusted their yield specification to meet seasonal conditions," he said.

"The Chinese processors use a washing yield in their specification for wool orders," Mr Ryan explained.

"It's a couple of percentage points higher that the dry yield used here.

"They might specify a washing yield in the low to mid 60s, but that means a dry yield in the high 60s here.

"At the moment most WA wool would be lucky to average 62 per cent yield (dry), which makes it difficult for buyers to average across orders to meet a specification that still requires maybe 67pc yield.

"In the past, about now is the time that some of the better quality, higher yielding wools stored in sheds would start to come onto the market to cover us.

"But that's all gone now, higher prices over the previous three seasons have cleaned that out," Mr Ryan said.

Westcoast Wool & Livestock topped the WWC buyers list after the one-day sale last week.

It bought a total of 572 bales, mainly skirtings and fleece with some oddments, to claim 18.4pc of the offering and a turn on top of the list.

Mr Ryan said the company had some orders to complete and saw an opportunity to do that.

It also had "good enquiry" for May and June, he said.

Chinese buyer Tianyu Wool was second on the list with 415 bales or 13.3pc, mainly fleece with some skirtings, purchased.

Another local trader, PJ Morris, was third with 354 bales or 11.4pc - nearly all fleece wool - while Chinese operated Lempriere (Australia) was fourth with 347 bales or 11.4pc, mainly fleece with some skirtings.

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