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3 August 2022
Wool Street Journal
Market Commentary

Palle Petersen featured recently on The Country, with Jamie Mackay, explaining the premiums growers can earn from organic wool and the importance of a well-prepared clip

The big question is how much of a premium can you get if you go organic?

Palle says PGG Wrightson is probably the only organic wool exporter in the country.  They've been working on organics for probably ten years and have a good customer in the US manufacturing bedding.  They're currently offering $5-50 for organic second shears, $3-50 for bellies and pieces and $7-00 for lamb's wool.  So you're probably talking at least a three-dollar premium.  Good news when conventional wool is not worth much at the moment.

Jamie points out that a record wet July has been a nightmare for pre-lamb shearing.  He imagines there are colouring and discolouring issues.

Palle says that so far the wool clip has been OK but that was probably shorn before the big rains.  There are certainly some concerns going forward.

Jamie wonders whether a lot of farmers, because they're not being paid a lot for their wool, are taking less care of it and kicking it straight into the bale.

Palle reminds us that farmers do get punished for this in the auction room.  When prices are low and demand is low, buyers are more selective and are prepared to pay extra for a well-prepared clip.  If taking care of your clip is going to improve your price by 50 cents or so, it's still worth doing. Jamie asks Palle about his recent European trip.  Is there light at the end of the tunnel for the strong wool market, considering fine wool is looking quite good?  Palle agrees that fine wool is looking extremely good.  He spent a week in Italy where they're expecting a record year volume-wise.  Crossbred wool in certain areas was going really well.  But with consumer confidence down and inflation running at 7 percent, customers in Europe for crossbred wool are expecting a slowdown.  The good news is that China is starting to take a bit more than they were at the start of last season.  They're coming back to more normal levels.  Jamie says there is anecdotal talk that shipping costs are coming down which could help matters.

Palle closes by saying PGG Wrightson is expecting an exciting visit in October from a European luxury brand.   They'll be looking for merino growers interested in a long-term relationship and heading down the organic track.  So do get in touch if you're interested.

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