China faces predicament

The Australian wool market finished 3 per cent lower last week as Chinese factories remained closed for extended New Year holidays.

Elders national wool manager Andrew Dennis said that as the textile factories returned to production this week they would face difficult decisions.

"They must decide whether to continue production or wait until more orders are received," he said.

Mr Ellis said most would likely hesitate on the back of the past 12 months of price volatility.

While purchasing activity by major retail chains for next winter should be in full swing, Mr Dennis said only a few retailers were prepared to commit.

"The silence is deafening," he said.

But Mr Dennis said the grim demand picture from Europe, faced with an inevitable recession, did have a white lining.

"Europe, being blanketed by snow at present, should generate some sales activity," he said.

Australian Wool Industries Secretariat's Peter Morgan said last week's wool market was solid in global terms given the significant increase in the US exchange rate since the last sale.

"The US exchange rate is now up by 8.3 per cent since the close of the last sale prior to Christmas," Dr Morgan said.

"The appreciation of the US exchange rate would have put all of the changes in the Micron Price Guide into positive territory."

In the western market, Grass Patch woolgrowers Geoff and Faye Sanderson said their wool prices were higher than last year.

The couple's 64-bale offering sold to a top price of 865 cents/kg greasy for nine bales of 19.5 micron wool.

Mr Sanderson said he was not surprised prices had remained at this level and he felt they would sustain for as long as supply stayed at record low levels.

The Sandersons farm with Geoff's parents, Ted and Betty, and a succession plan is in place for the next generation.

Mr Sanderson said his son, Nathan, and his wife, Catherine, had ambitions to carry on the farming tradition grandad started in the 1920s.

"A family decision is approaching on how many wether lambs to keep this year," he said. "Last year we received $130 per head and depending on the season, it would be good to keep all the wethers this year."

The Sandersons run 1300 breeders on 1000 hectares of Medic pastures and buy rams from Derella Downs stud.

"We have been successful reducing micron while increasing yields in the last five years," Mr Sanderson said.

They also crop 3500ha with a mix of wheat, barley, peas and canola and run a cattle operation consisting of 200 Angus breeders on their Shark Lake property.

Sheep are also grazed on cropping paddocks to provide optimum stocking rates.

Central Wheatbelt woolgrowers Bryce Wilkins, 28, and his neighbour, Mitch Innes, 26, were both very pleased with the wool prices last week, saying they were up $100 a bale on last year.

"Certainly they were the best prices we have seen in a very long time," Mr Wilkins said.

Both he and Mr Innes agreed that sheep were a very important mix in their cropping programs.

While the Wilkins family crops 2000ha and runs 1700 Merino ewes, the Innes family crops 5000ha and carry 2000 Merino breeders.

Both buy rams from the Button family's Manunda stud, in Tammin.

The two young sheepmen share a belief that many Wheatbelt farming families who got out of sheep were regretting the decision.

"People around our age don't readily admit they may have made a bad decision but it seems evident," Mr Wilkins said.

This week the national wool offering stands at 44,980 bales.