Wool going gangbusters | Colliers

Why Australian wool is going gangbusters

Sheep
IN DEMAND: Fine wool growers are now receiving more than $2000 a bale.

IN DEMAND: Fine wool growers are now receiving more than $2000 a bale.

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Woolgrowers are reporting the best returns in 20-30 years .

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AUSTRALIA’s wool industry is riding a wave of success, with growers now seeing returns not experienced in 20-30 years. 

Writing in the 2017 Colliers International Rural and Agribusiness research report Australian Wool Network (AWN) wool technical manager Kelvin Shelley said the market was being driven by competition from Europe, China and India. 

“The amount of bidding I am witnessing in the auction room is unbelievable and unprecedented,’’ he said. 

AWEX’s Eastern Market Indicator (EMI) has risen from 1088c/kg in 2014 to an impressive 1437c in 2017.

The nation’s flock average currently stands at 21 micron with this micron indicator rising from 1213c in 2014 to 1439c in 2017. The outstanding performer in the past 12 months has been 17 micron wool which has rallied from 1320c in 2014 to 2040 in 2017. In just the past 12 months it has jumped from 1563c to 2040c.

Mr Shelley said there had a been a massive increase in the finer end of the market, with growers receiving more than $2000 a bale. 

A major sell-off of sheep during years of drought has resulted in a huge reduction in the nation’s wool clip and it was inevitable the time would come where demand would far outweigh supply and the industry would experience a shortage of wool, he said.

“Australia is currently producing half the wool it did in the 1980s creating much greater competition,” Mr Shelley said. “Demand is also being driven by consumers who are looking for renewable, environmentally friendly fibres especially with an increase in the number of next-to-skin products being manufactured.”

Sheep numbers remain low, However, the national flock should increase by the end of the 2016-17 season to 73 million head with wool production up by 2.2 per cent to 332 million kilograms greasy.

AWN wool and sheep specialist Brent Squires said marketing strategies were paying off.

“Australian Wool Innovation is doing great things with marketing and we are seeing the benefits of that,’’ he said.

“Here at AWN we are giving wool a regional brand and putting a story to the product which people like. They get a good feeling when they know where their wool is coming from and this is helping drive wool sales.’’

Mr Squires said there were amazing opportunities for wool growers.

“People investing in sheep can lock in good forward prices and there is no reason not to expect high returns down the track,” Mr Squires said.

Excellent returns for wool and sheep are also providing a boost for property prices. Demand for properties being sold on a walk-in, walk-out basis is very high with stock being so difficult to purchase, the Colliers report says. “The livestock game is very good and people want properties which are ready to go with good quality stock so this is really being reflected in property prices.”

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