Wool price rises despite rising inflation, shipping crisis

The benchmark indicator for wool rose last week despite rising inflation and shipping issues, with international markets staying strong.

Wool is defying rising inflation and shipping issues as its benchmark indicator rose almost 2 per cent last week.

The Eastern Market Indicator closed at 1401c/kg, up 24c/kg on the previous week and was dearer in US, Chinese and European currencies.

It comes as the Australian Wool Innovation board has talked up the prospects for the industry despite world economic and logistics challenges.

David Jones general manager of marketing and communications and AWI board director, Georgia Hack, said three factors placed wool in a good position.

“The luxury sector is continuing to see significant growth, and this is a global phenomenon,” Ms Hack said.

The growth of the eco conscious consumer, Ms Hack said, particularly the Millennials and younger, “Gen Z” buyers, was also good for wool.

“They are definitely buying in a different way to some of the older consumers and that is around their perception of value — value determined quality and longevity,” she said.

Wool’s position in the sports wear market, and the lessons to be learned from innovation, were also important.

Fellow AWI board member Noel Henderson who operates Avington Merinos at Sidonia, said he had noticed increased demand during Covid-19 for his wool, which “is ultrafine and the finer end of superfine”.

“We have seen increased demand and more people knocking on the door wanting to buy wool,” Mr Henderson said.

There was a strict criteria however, with most buyers wanting wool with Responsible Wool Standard accreditation.

“Reports we get out of China with their growing middle class and beyond that go into the real high end, are starting to consume these products and not only buying the European brands,”

Mr Henderson said.

“We are seeing young designer Chinese brands, so we are also getting Chinese buying more of the luxury fibre, RWS certified.”

Don Macdonald who operates Macdonald and Co Woolbrokers at Dubbo, NSW, said issues with shipping were masking the “true recovery of the wool market”.

“We were expecting a much stronger recovery post-Christmas in middle micron wool but this has not happened because of … the lag times getting wool through the pipelines,” Mr Macdonald said.

“We are lucky the currency going with us the offerings are getting smaller, so we are hoping this will tide us through next few months without the market slipping much,” Mr Macdonald said.

“The true market situation could be a couple of hundred cents higher (prices) than they are now.”