‘Stars align’ for wool market, but grower says it needs to hit a new level
The wool market has regained its stride with prices jumping 95c in two weeks, but a grower says prices must be higher to deter a declining ewe flock.
Wool prices have risen 50c/kg again, but a producer says the market will need another 30 per cent rise to deter a declining ewe flock.
The Eastern Market Indicator has risen 95c/kg during the past two weeks to 1514c/kg, with a 56c/kg rise last week.
The national market had a 3.2 per cent pass-in rate last week, before about 40,000 bales were offered this week as wool growers started to capitalise on current trading conditions.
For Melbourne’s market, 20 micron wool had the highest weekly jump up 113c/kg to 1849c/kg, while 16.5-18 micron wool rose 47-57c/kg to sit between 1995c/kg and 2150c/kg.
AWI general manager international Stephen Hill said the wool market was 377c/kg higher than the same time last year, or 33.7 per cent higher.
Coarse wool bales had re-emerged in the past three months after some growers stocked two to four years of crossbred wool. Mr Hill said crossbred wool prices had nearly doubled.
“But the story is longer than just the last couple of weeks,” he said.
“Over the year we’ve had a few false starts; it looked like we’d start to have a rise since Covid, but (we’ve had) about five years of a pretty lacklustre prices – just covering the cost of production for wool growers.
Mr Hill expected prices to ease this week with a larger offering, but the industry remained “quite confident” in the trade conditions.
Superior Wool Merinos stud principal Richard Harkness from Tintinara, South Australia, said the wool market sat at about 2020-21 price levels, but needed a 30 per cent price rise. He said his biggest on-farm cost had been shearing.
He currently had 50 bales of 18 micron wool set to be sold in December.
“If you look at first-cross ewes at Naracoorte in the past fortnight ($540 top), they had risen to a new level, while the wool market has to rise to a new level as well,” he said.
“It clearly is not at a level to stop ewe numbers declining.”
Elders wool operations national manager Simon Hogan also said there would need to be higher prices to incentivise producers to rejoin the market.
“Wool fights for land use with other farm commodities whether it be cropping, cattle or fat lambs, and current prices I don’t believe are high enough to bring people back,” he said.
“It’s gathering momentum, everyone has one eye on supply. We aren’t holding a lot of hold stocks, now we’re seeing this rally and we have three weeks of sales left for buyers to deliver before the Chinese New Year, so that’s a positive before Christmas.”
