Supply and demand factors favouring growers in post-Christmas wool market
Post-Christmas prices at auction for all crossbred wool types have lifted. Supply and demand factors are playing into a scenario that favours growers: supply coming forward for sale is lower than anticipated, while manufacturers in China have increased demand, further stimulating the wool market.
Compared to what had been rostered, reduced quantities of wool have come forward for sale. Buyers are therefore competing strongly to fill commitments they have made. Prices for all types are rising accordingly.
Pre-Christmas concerns relating to the climate suggested that a relatively high proportion of this season’s wool would be degraded due to vegetation contamination and colour. While those rain and humidity climatic factors have eventuated, due to buyers from China strengthening the market, increased demand has balanced out, meaning average to poor types are still attracting competition. The auction system has come into its own as a forum for transacting the product, bidding from exporters who need to fill their orders has been spirited, with practically all wool coming to auction being sold.
Likewise, due to smaller quantities, generous premiums are being paid for the best styled, good colour, low VM wools, including lambs’ wool of these types.
From a farmer perspective, prices need to continue to improve, though it is gratifying to be able to deliver some positive news. Longer term, global demand for natural fibres seems to be increasing. As the world becomes more aware of the environmental challenges associated with synthetics, behaviours will change.
PGG Wrightson Wool