New high for golden fleece

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Bob GarnantCountryman
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Swan Wool Processos principal Paul Foley is encouraging WA woolgrowers to take pride in higher farmgate wool prices.
Camera IconSwan Wool Processos principal Paul Foley is encouraging WA woolgrowers to take pride in higher farmgate wool prices. Credit: Bob Garnant

Tomorrow’s Wagin Woolorama will kick off amid a period of skyrocketing Australian wool prices.

The sustained high prices of recent months soared to new levels last week when the Eastern Market Indicator hit a magical 1500 cents/kg, and the Western Market Indicator an even higher 1547c/kg.

The prices are the best they have been for 29 years, with AWEX market analysis Lionel Plunkett saying the EMI’s 51c/kg increase last week was pushing it into uncharted territory.

“The EMI has risen seven out of the eight selling weeks in 2017, making it the best start to a calendar year since 2011,” he said.

“The micron price guides in the 18.5 to 20-micron range are all at record levels but still have some distance to go before eclipsing the record levels set in 1988.”

Mr Plunkett said the sharp increase in prices had encouraged more sellers to the market, pushing the national quantity up to more than 47,500 bales.

Swan Wool Processors principal and WA wool exporter Paul Foley said the higher prices were what “everyone has been wishing for”.

“With demand for Australian greasy wool outstripping supply, farmers’ wool checks are now a serious part of their income,” he said.

“We have not seen these prices in more than 20 years. Brokers are obviously happy because they have not seen such satisfied wool-growing clients in such a long time. It is a time for farmers to take pride in the wool side of their business. Growers should be assured their efforts to increase supply will be noted globally.”

Mr Foley, who is a major carding buyer in WA, said exporters must wear the resulting higher cost of GST, which was non-transferable.

“Some merchants are saying prices are too high, but they still have to feed the processing machines,” he said.

“The Australian industry has foretold of its reducing flock size for the last 20 years, but now the low wool-supply situation is very real and overseas processors are only just beginning to realise.

“Higher wool prices come with a risk factor in that processors may use substitution and blend more competing fibres, such as acrylics, into their blend formulations to produce yarn. However, if retail accepts higher apparel prices with minimum blending, then we have a new norm.”

Mr Foley said while he could not tell if demand would be sustained, processing sector technology continued to improve which would drive new innovation and demand.

Department of Agriculture and Food of WA sheep industry development director Bruce Mullan said there continued to be strong overseas demand for WA’s sheep industry, primarily for meat, which hadn’t yet been reflected in an increased supply.

“To capitalise on further opportunities, things will have to change and the likely driver for this must be from the processing and live export sector,” he said.

“Whether it is just a handshake or long-term contracts, there must be a strong message back to the growers to give them confidence to lift production. Until change is under way, the WA market will be constrained by supply.”

National Council of Wool Selling Brokers of Australia executive director Chris Wilcox said the EMI was at the highest level in nominal terms. “Once inflation is taken into account, current price levels are well below the extraordinary peak seen in mid-1988,” he said.

“In fact, the EMI at 1500c/kg clean in real terms is only equal to the peak seen in 2011 and below the peak at the end of 2002.”

Elders said while it was great to have the wool market back at record levels, some are starting to ask where to from here.

“It may well rise a lot before running out of steam rather quickly,” the Elders spokesman said.

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