Wool market not yet recovered from COVID hit

Speaking at last week's International Textile Organisation Congress in Adelaide, Australian Wool Innovation trade consultant Scott Carmody said it was getting more difficult to become a woolgrower in Australia with the rising price of land.

"It's also very difficult to tell someone to take the price they got 20 years ago," he said.

Mr Carmody said with the market heading back towards to COVID-19 prices, the industry hadn't really recovered.

"We saw a glimmer of hope when China came out of recovery but that was fleeting," he said.

"Local Australian dollar prices are holding relatively better than the US but I think everyone in this room knows that the measurement of demand is the US price levels."

Mr Carmody said Australian Wool Testing Authority data showed that the fibre diameter distribution was moving in both directions.

"The terrible prices of our strong wools the last two or three years has not stopped our landowner heading towards the coarser end of the industry," he said.

"There's more superfine wool as well, that end of the market is increasing, growers are looking for a higher price trying to retain the kilos but getting more cents per kilogram.

"At the other end they've just given up and gone to the meat over the fibre, chasing the protein.

"The Australian broad wool is now over 20 per cent... this hasn't been seen for decades."

But Australian stronger wool prices have now surpassed those being paid for cotton, acrylics and polyester.

Mr Carmody said Australian Bureau of Agricultural and Resource Economics is forecasting that advanced economies' demand for woollen products will increase in the medium term, while prices are tipped to rise 6pc to 1243c/kg in the coming financial year.

"The forecast from most is for the textile industry to be improving over the next year or longer, so it's good," he said.

In terms of the overall global financial outlook NAB associate director of group economics Lea Jurkovic said growth had softened in most advanced economies but inflation was starting to come down.

"It's slow but the good news is there's a healthy amount of resilience in the labour market in advanced economies," she said.

"We are talking about central bank rate cuts... most central banks are expected to start cutting rates in the second half of this year.

Ms Jurkovic said depressed household consumption was a major factor in why growth had been slow.

"In Australia, it's quite interesting, consumer confidence was stuck for a while around Global Financial Crisis levels, which is remarkable because our unemployment figure has a three in front of it, which is super strong," she said.

"Disposable income in households have definitely improved since before the pandemic in the US and in Canada it's been kind of sideways, but above where it was before the pandemic.

"In the Euro zone little changed and in particular inflation is really eroding the purchasing power of dollars in the UK and in Japan.

"We're expecting global economic growth of 2.9 per cent for this year, so that's slowed from about 3.2pc last year, before picking up a little bit to about 3.1pc in 2025.

"If these forecasts materialise, it's the first time since the '90s I believe that we've had three years of global growth consecutively below the long-term average of 3.4pc, so we're looking at a relatively subdued picture for the next little while."