Wool price highest since COVID-19 hit, fine wool premium at record high

Wool prices have surged to their highest levels since the coronavirus pandemic began, with WA woolgrowers selling the luxury fibre for 12-month highs.

The Eastern Market Indicator has continued on its upward trajectory as retail activity in the northern hemisphere ramps up off the back of COVID-19 restrictions lifting and shops reopening.

Last week it hit 1472¢/kg, the highest it has been since March last year, when the world went into lockdown and retail sales — and consequently the demand for the luxury fibre — plummeted.

It sparked fears hordes of bales would be stored on farms as wool growers held onto the product to avoid taking significant financial hits and selling when the price dropped as low as 858¢/kg in September.

But the market’s recovery over the past 10 months — jumping 330¢/kg from September to November 2020 and aside from a dip in December, remaining relatively stable on an upward trajectory since — has seen that wool shifted.

Mecardo managing director Robert Herrmann called it a “shot in the arm” for the industry.

Our supply will be hand to mouth and the market is going to be well-supported — as it’s shorn it’s sold.

“Farmers are really taking advantage and selling wool.

“We’re not going to have the significant stores of wool we thought we may have.

“ One week we sold 15,000 bales.”

He said fine wool producers had benefited to an even greater degree with the premium for 17 micron over 21 micron wool at “all-time record highs”.

Mr Herrmann said the premium reflected the recovery from drought in the Eastern States, where sheep were now producing broader wool off the back of better pastures.

“What a drought does, the sheep don’t have enough food to produce the wool and you end up with a lot of fine wool,” Mr Herrmann said.

“The shortage of pasture results in a reduced protein intake for the sheep and to compensate, the sheep puts less effort into growing wool so its a finer micron diameter and there’s less of it.

“When the drought breaks, the reverse happens.

“There’s an abundance of protein so the sheep are all quite fat and grow heaps of wool, which is quite a bit broader.

“(During the drought) medium wool was under supplied and fine wool was over supplied.

Now the fine wool market is under supplied — the finer side of your wool clip is now very valuable.

WAFarmers vice-president Steve McGuire said it was “comforting” to see prices where they were after last years lows and it would give confidence to growers.

It’s good to see the market going strong.

He said with grain and beef prices so high, wool needed to performing reasonably well and hold its own against the other commodities.