Crossbred comeback

Crossbred wool gains signal cheaper blends demand


Sheep
Don't discount the versatility of the broader wools. Crossbred or 'comeback' wool is being blended with finer Merino fleeces to produce a 100pc wool product with a better retail margin.

Don't discount the versatility of the broader wools. Crossbred or 'comeback' wool is being blended with finer Merino fleeces to produce a 100pc wool product with a better retail margin.

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A strong month for crossbred wools a reflection on mills looking to churn out garments that still have the 100 per cent wool logo.

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Don’t discount the versatility of broader wools. 

Crossbred or ‘comeback’ wool is being blended with finer Merino fleeces to produce a 100 per cent wool product with a more desirable retail margin. 

According to Australian Wool Innovation’s trade consultant, Scott Carmody, price rises in the broader wool types during recent auctions are a reflection of mills looking to churn out garments with cheaper blend components, but still retain the 100pc wool logo. 

At last week’s sales the eastern market indicator (EMI) had it’s fifth week in a row rise increasing by seven cents to close at 1934c per kilogram, clean.

But it masked the advancements in the the 28 to 30-micron zone that saw price gains of 100c or almost a 15pc increases in one week. 

In the southern markets 26-micron fleeces finished on 1333c/kg with the northern auctions at 1343c/kg. 

The slightly finer edge in crossbred fleeces, 24 to 27-micron also appreciated by 45c or 3.5 to 4pc.

Mr Carmody said with Merino prices relatively high and volumes low, overseas manufacturers are looking to other sources to continue to participate. 

“The easy method is to go to synthetic blends, and this is still going on, but as soon as they do that they don’t have the 100pc wool label,” Mr Carmody said.

“The consumer then expects the price (at retail) to be cheaper, therefore the retail price level isn’t retained. By doing a little clever blending, retail price levels can be retained as long as long as the quality is still there.”

He said in the last four years the wool industry has been greatly assisted by the advent of the fake fur product and more importantly the double facing fabric. 

“What was so good about it was there was a high margin on it because it was popular at retail,” he said.  

“But what we are seeing at the moment is a little different. Because of the consumer wanting a garment made of 100pc wool, the mills have now worked out a way where they can comb the softer end of the crossbred market.”

Mr Carmody said breeding, coupled with drought conditions across much of Australia’s wool growing areas, is enabling mills to blend the crossbred wools with the finer Merino fleeces. 

“Traditionally our crossbred wool would be between 27 to 33-micron, it would just be too harsh and too broad, but a lot of the crossbred wools are softer and measuring 23 to 26-micron at the moment,” he said 

“You can put a little bit of that through with a finer Merino fleece and still retain the 100pc wool logo.” 

He explains the finer end of the crossbred wool as ‘comeback’ wool, with a Merino base to start with. 

Since the commencement of the new year, crossbreds have shown substantial price advances with 24 to 27-micron improving by 8.6 to 10.6pc, 28 to 30-micron 20.6 to 22.4pc while the broadest edge 12pc against a general backdrop of 3 to 4pc gain in Merino price over the same time period. 

Merino volumes remain low reflecting the relatively high prices still being paid by buyers. 

This week just over 40,000 bales are being offered with the following two weeks falling sharply to just over 30,000 bales each. 

When compared to the corresponding sale of 2018, the total amount of bales offered is down by 177,047, a reduction of 15.7pc. 

It is anticipated that the market will be under a little pressure this week with the Chinese New Year capping demand as Australia’s biggest customer takes a seven day break. 

Ongoing concerns of supply still at forefront 

According to Mercado analyst Robert Herman It is unlikely that 2019 will see any change to the trend of reduced supply, as large-scale abattoir throughput of mutton sheep points to a continued de-stocking in drought areas.

This combined with the continued dry period negatively impacting on fleece weights will retain supply pressure on the market.

“Any rain-induced supply increase will take time to come through, and while growers restocking by holding onto more ewes will occur post good rain, it will also take time for the flock to grow coming of this low sheep number,” Mr Herman said. 

Last week saw a supply drop on levels from the last few sales, with just 38,830 bales on offer.

Growers passed in 7.2pc of bales offered, resulting in a clearance to the trade of 36,027 bales.

The season to date has seen 952,848 bales offered which is down 15.7pc bales few than the same period in the 17/18 season.

Key test data from AWTA shows the monthly comparisons of total weight for January 2019 compared with the same period last season show 12.2pc less wool tested than January 2018. 

The progressive comparison of total weight for July 2018 to January 2019 compared to the same period last season shows a cumulative 12pc reduction in the current season tested wool. 

The story Crossbred comeback first appeared on Farm Online.

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