Low supply buoys WA market

WA’s wool market continues to trade at a premium compared to east coast (Southern Region) wools, according to Lempriere trading division manager Evan Croake.

Mr Croake, who relocated to WA in September, was one of the keynote speakers at last week’s AWEX Wool Forum at Katanning.

The forum brought together 50 people, including producers, brokers, wool contractors and trainees.

Mr Croake said the WA wool market was a bit more buoyant that the Eastern States markets.

“Mostly because of low supply of wool available,” he said.

“While the east coast offers more volume and variety of wools, WA wool (mainly 17.5 to 22.5 micron) is more of a commodity-style wool and perfectly suited to Chinese and Indian buyers.”

Mr Croake said while Lempriere supported centralisation of the national wool selling system if it was beneficial to the wool industry, he believed WA worked better on its own as a niche market.

“The move to sell all WA wool in the one room recently at the Western Wool Centre was a step in the right direction,” he said.

Mr Croake said Lempriere, which has been trading in Australia for more than 150 years and is one of the world’s largest wool merchants and processors, would maintain a “sale by sample” approach, as the method reduced risk associated with “sale by description”.

“Lempriere must guarantee its product to its clients and the sample inspection is imperative to ensure we keep issues such as colour as low as possible,” he said.

In regards to forward selling, Mr Croake said many retail clients and processors were looking for more options to lock-in supply, but said the difficulty was in finding growers/brokers who were willing to consider multiple'''''' year-forward contracts.

“With some retailers/processors now looking to lock-in price/supply for up to 3 to 4 years in advance, it is becoming a difficult to source the volumes required,” he said.

“Most growers are not willing to consider contracts of more than 6 to 12 months in advance.”

Mr Croake said Lempriere supported non-mulesed wool and worked with multiple clients who were consumer and risk-assessment orientated.

“A lot of clients are now looking to buy non-mulesed wool, mostly on the ethical standpoint to avoid any negative brand risk.

“Non-mulesed wool is not as much an issue to Chinese domestic processors, however it is of major concern to some of their end users.

“Many more retailers are requesting non-mulesed wool, but Lempriere has to restrict orders from Australia because there is just not enough supply.”

Mr Croake said non-mulesed wool had to be sourced from other countries because of the slow take-up from Australian producers.

“South Africa is now attracting a premium price compared to Australia, and countries like Argentina continue to benefit from their non-mulesed status.”

Mr Croake said he did not think any one factor would dramatically change the current wool demand situation in the short-term.

“The genuine low supply of wool should continue the run of strong prices,” he said.

“If prices go too high, consumers may consider buying garments made from competing fibres.”

Also speaking at the forum was newly appointed AWEX wool classer registrar Fiona Raleigh, who spoke on the wool handling code of practice.

AWEX chief executive Mark Grave, who spoke on the National Wool Declaration and why it was here to stay, said the forum provided an excellent opportunity to have an open discussion on important issues surrounding the industry.

AWEX WA technical controller David Aslett announced his retirement at the end of June, after 22 years with the exchange and a total of 50 years in the industry.

More in next weeks Countryman.