Less wool, but better prospects

08-03-2010 | Greg Sweetnam

Increasing consumer confidence in the year ahead will drive up demand for wool a leading commodity analyst told the ABARE Outlook conference in Canberra last Tuesday.

ABARE chief commodity analyst, Dr Jammie Penm, said Australia's Eastern Market Indicator price for wool is forecast to increase in 2010-11 as world economic recovery continues.

"Wool supplies in Australia, the world's largest exporter of greasy wool, are expected to remain low because of a decline in sheep numbers," Penm said. "Demand for woollen products is expected to rise in 2010-11 as consumer confidence improves coming out of the global financial crisis."

Penm highlighted the importance of China's textile manufacturing sector for the Australian wool industry.

"China is expected to move increasingly into higher quality woollen textiles and clothing over the medium term in response to competition from low cost textile manufacturers in South East Asia."

Delegates also heard from Felicity McDonald, public relations and communications manager of The Merino Company, who emphasised the need for product differentiation and risk management in promoting natural fibres such as wool to retailers and consumers.

"Our business model encourages wool producers to participate further in the wool supply chain, and assists in developing branding and marketing techniques for wool products at retail," said McDonald.

Australian sheep numbers are currently at a 94-year low.

The Australian Bureau of Statistics recently released its final estimate of the number of sheep in Australia at July 1, 2008, at 76.9 million - the lowest since 1916.

That figure is projected to fall another 8% this year.

The forecast for Australian shorn wool production in 2009/10 is 330m kg greasy, compared with its March forecast of 335m kg greasy. The forecast for 2009/10 is around 30m kg greasy lower than the 2008/09 season.

Australian mutton exports are forecast to be back 17% in 2009 and a further 13% in 2010 to 186,000 tonnes - the lowest level since 1983. Live exports are expected to fall by 10% this year and 13% next year to 3.3 million head. That's the lowest since the 1980s.

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