Crossbred wool drags its feet

Crossbred prices move closer towards parity with cotton

Wool
Crossbred wools continue weaken as retail demand for the type of wool lessons.

Crossbred wools continue weaken as retail demand for the type of wool lessons.

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Weakness continues in crossbred wool prices as demand continues to falter.

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This time two years ago crossbred wools were making the gains Merino wools are making today.

But the current lack of demand in retail products which use crossbred wool has seen prices continue to drag their feet.

And wool industry specialists are predicting no real recovery in prices for the broader types until 2022.

Just last week Merino wool prices rose up to 80 cents, but crossbred wools continued to ease with micron price guides (MPG) for 26 to 30-micron posting losses of up to 15c.

The only crossbred MPG to manage an increase was 32-micron, which made the smallest gains of just one cent.

Coinciding with continued weaker demand in the global broad wool market is a local increase in crossbred wool supply this season.

Season to date, the Australian Wool Testing Authority have tested nearly 20,000 tonnes greasy, or 116,000 bales of wool 28.5-micron and coarser - a 25 per cent increase year-on-year.

According to industry experts, although economic growth is rebounding globally, the extent of which COVID is inhibiting demand in the interior commercial market remains significant.

And whilst the demand for interior wools has benefited from consumers spending on the house with the 'work-from-home' movement, it's not enough to offset the losses in the commercial interiors textile market.

Executive director of the National Council of Wool Selling Brokers Paul Dean said the weakness in crossbred wool prices are pushing closer to parity with cotton.

"The segment of the market driving prices lower is a reduction in demand from commercial or contract component of the interiors textile market," Mr Deane said.

.........the improvement in market demand for interior wools is not likely to return until 2022 at the earliest - Paul Dean

"This market consists of demand for broad wools in carpets and furnishings for hotels, casinos, exhibitions, office spaces, airlines and cruise ships.

"In many cases, the business models of these industries either remain significantly constrained or only just starting to re-open."

Mr Dean said the loss of business to date and the ongoing threat COVID still poses leaves a high degree of uncertainty, which typically for business means a reduction in capital expenditure including new fit-outs of interior spaces.

"Global companies are still in survival mode," he said.

"The extent of disruption in some of these global businesses and resultant focus on survival (solvency) cannot be underestimated."

Major cruise ship company, Carnival Corporation, with revenues of US$20 billion per annum prior to COVID has seen revenues fall to just US$4-5 billion pa with loses in the vicinity of US$2-3 billion per quarter in 2020.

Mr Dean said while there is some optimism returning to the cruise ship industry, challenges will certainly remain.

"In April the US Centre for Disease Control (CDC) issued guidance to the cruise ship industry including the need for crew and port personnel to be vaccinated before voyages can return," he said.

"New protocols will also be required by the cruise ship industry to manage COVID risks before sailing with passengers."

A UK based international cinema chain operating in 10 countries, 800 sites and 9500 screens had pre-COVID levels of US $4-5 billion pa, but revenue dropped back by 75pc in 2020.

In 2021 they are only expected tp recover back to 50pc of 2018 and 2019 levels.

"Normality in some of these industries and as a result, the improvement in market demand for interior wools is not likely to return until 2022 at the earliest," Mr Dean said.

The story Crossbred wool drags its feet first appeared on Farm Online.

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