Wool tipped to rally in 2011
Sheep farmers in WA could see a return to the golden days of high wool prices as strong international demand pushes up prices to their highest level since 2002.
After one million sheep were trucked across the Nullarbor because of drought in WA last year and widespread flooding in Queensland delayed the northern shearing season, limited supplies of wool were available for sale last week.
Prices for the Western Market Indicator hit 1125 cents per kilogram, up 122 cents since last week, while 19.5 micron wool surged by 212 cents to 1323c/kg.
Increasingly popular 18 micron super-fine wool sought by fashion designers in Europe increased by 236 cents to 1808 c/kg.
Westcoast Wools director Mal Edinger said Chinese buyers realised that Australian supply was dropping and would prefer to buy now to avoid higher prices later.
He said based on his market research, 23 micron wool was now at its highest peak in US dollar terms in 60 years.
“I think the Chinese are worried about the drought in WA and the gradual turn of farmers getting rid of sheep and going into cropping, so they’re worried about what supply there is going to be, ” he said.
“Conversely, with the floods in Victoria, NSW and Queensland, shearing will be put back and some of the wool will be too long for the Chinese.”
Elders Wool International senior buyer Stewart Raine said the previous price peaks were in 2002-03 and 1987-88.
“This rally in the market will make sheep in a farming business profitable again and you would have to think that fine wools will have to continue to rally, ” he said.
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