Wool prices: Falling rates due to international shifts

With crossbred wool prices falling, farmers are being urged to question the place that the wool holds in their enterprises.

Sheep producers should not get caught up in depressed prices for crossbred wool, according to some experts, which are languishing at their lowest levels for years.

Rates for 28-micron fell 25c/kg at wool sales in Melbourne last week to just 415c/kg clean putting values at the 0.1 decile, meaning in the past 16 years, 99.9 per cent of prices have been higher.

The dismal position is far from the heights of crossbred wool demand when prices peaked at 1323c/kg and are close to its lowest level of 402c/kg.

Fox and Lillie Culcairn branch manager Jen Turner said it could be time for a paradigm shift over crossbred wool.

“It’s always been thought that crossbred wool needs to add to income and at least cover the cost of shearing,” Ms Turner said.

“Perhaps we should be thinking about shearing as a value-add to sheep to make them more saleable, or a management/animal husbandry cost.”

Ms Turner said Australia was a small player in the world crossbred wool market supplying less than 10 per cent of total global production. This meant that currency movements played a role in Australian crossbred wool values.

Consumer trends — away from heavier weight garments produced from crossbred wool — were also impacting on prices.

“The most recent peak for crossbred wool was based on a trend where it was made into fake fur,” Ms Turner said.

“I would be thinking about the wool component of your budget in a crossbred enterprise, which would have halved in the past five years, and assessing if it was an important financially to the bottom line,” she said.

“Crossbred wool prices are volatile so perhaps think about how shearing will help your management rather than your income stream.”

Lambpro principal Tom Bull from Holbrook, NSW, said while crossbred wool could contribute to the bottom line, its role was often minor in terms of gross margins

“If you are running a self-replacing (composite) flock which is producing $1800-$2000 a hectare from meat value, the wool value of $70 a hectare is not a big contributor,” Mr Bull said.

“The question producers need to ask is if they are happy with where they are in terms of profit with their flock, including minimal returns for wool, or if they want to take wool off totally or make their wool quality better.

“It’s important to understand though that improving wool comes at a cost such as poorer growth rates in lambs and worm burdens.

“Yes, there is a falling contribution of crossbred wool in income but overall returns for sheep producers have never been higher.”