Wool

Output $745 m est. Down 4% yoy.
Consumer demand for textiles remained relatively subdued due to COVID-19.
NSW shorn wool production was up 5.2% yoy.

The 2020-21 market was a rollercoaster for NSW wool growers. Good seasonal conditions provided a welcome boost to shorn wool production, however the delayed effects of the economic downturn on global textile demand had a significant effect on the wool market with prices continuing their downward spiral until the end of 2020. An increase in greasy wool exports in early 2021 reflected slow improvements in demand and prices recovered just as dramatically as they had fallen, with the EMI finishing just below the 10-year average by the end of June.

DPI Trangie Agricultural Research Centre welcomes back Junior Judging enthusiasts

Trangie Agricultural Research Centre hosted the Trangie Junior Judging Day on Monday 28th June. This community event provides young agricultural enthusiasts, ages 5 to 24, the opportunity to learn and test their show judging skills at what can be the first step in a pathway to competing at prestigious State and National levels.

Director Trangie Agricultural Research Centre, Kath Donoghue said DPI is proud to host the local competition, which gives young people the chance to nurture their passion for agriculture, while also highlighting agricultural career and education pathways available through DPI.

Media Release

Sheep selection and management tools - OFFM Calculator

The OFFM (on-farm fibre management) Calculator assists commercial wool producers to determine whether fleece measurement is likely to be a profitable practice for their flock. Using basic information on flock structure and performance, the calculator shows the likely profit from four areas of production; hogget clip preparation, adult clip preparation, ewe selection and wether selection. The returns are shown in a simple graphical format over a ten year period and offer some suggested changes for increasing profit by altering structure or selection method.

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Production

National quarterly wool receivals

Download data (.XLSX)

Source: ABS (2021)

NSW shorn wool production is forecast to reach 99.2 million kilograms greasy ⁴⁹ up 5.2% on 2019-20 levels. The numbers of sheep shorn continued to fall, down 4.4% year-on-year ⁴⁹, reflecting lower opening sheep numbers and the relative strength of the sheepmeat market over the past few seasons.

The seasonal conditions had a dramatic impact on average wool cut per head, up by 10.2% to 4.5 kilograms.⁴⁹ Average staple length increased 3 millimetres.⁵⁰ The impact of COVID-19 on seasonal shearer availability meant that some wool producers were forced to delay shearing or return to a longer shearing interval.¹⁷⁶ ⁴⁸

Fears of a growing on-farm wool stockpile surfaced early in the year as farmers reacted to the falling market, with many choosing to hold stock back from sale until prices improved. National wool receivals dropped significantly over the June and September quarters but production did not, implying that wool stocks were accumulating somewhere along the supply chain. These concerns were relatively short-lived. Receivals started to pick up pace again by March and by the end of June 2021, had outpaced production, indicating a draw-down of stocks. The total number of bales offered at auction nationally for the season was 1,762,121, up 21.4% year-on-year and the number of bales sold at auction was 29% greater than 2019-20.⁴⁷

Price

The start of the 2020-21 season saw the wool market under significant pressure with the ongoing economic impacts of COVID-19 resulting in global supply outstripping global demand. Prices fell to levels not seen since 2012-13 with the benchmark Eastern Market Indicator initially falling 23% to reach a low of around 858 cents in September 2020 with declines across all fleece types and descriptions.¹⁶⁶

Prices recovered during the final quarter of 2020, largely due to an upturn in Chinese demand as processors sought to replenish stocks. The Eastern Market Indicator rose solidly again, to reach a season high of 1,468 cents per kilogram by the final week of June 2021. Despite the larger volumes that started coming onto the market in early 2021, prices held up well with much of the downward pressure coming from last season wool stocks with large amounts of topsoil and new stocks with high a vegetable matter content.¹⁰¹

However, this recovery was not uniform, with finer wools experiencing greater levels of support than medium Merino and broader styles. The strongest gains were seen across the supply-restricted fine and superfine microns, widening the fine wool premium. By the end of June 2021, 17 micron wools had risen 88% from the low in September 2020, compared with 58% for 20 micron wool, demonstrating strong demand from the next-to-skin and knitwear sectors.¹⁷⁷

AWEX Australian monthly average micron price guide

EMI
17um
19um
21um
26um
30um

Download data (.XLSX)

Source: AWI (2021)

Trade and Macroeconomic Conditions

The milling and textile production industry continued to experience ongoing disruption as a result of the COVID-19 outbreak, with global downstream consumer demand for textiles remaining relatively subdued throughout 2020. Total NSW wool exports for the year increased in volume but decreased in value. A total of 54 thousand tonnes of wool was exported in 2020-21, up 6% compared to the previous year but down 20% on the 10-year average. In value terms, wool exports were worth $466 million, representing a decrease of 12% year-on-year and down 27% on the 10-year average.¹²⁹ China was once again was the dominant export partner in 2020-21, increasing its market share to a total of 89% by volume and 90% by value.¹²⁹

The continuing vaccination rollout and the gradual easing of restrictions provided a welcome boost to consumer confidence in early 2021 and resulted in a strengthening of wool demand indicators. US retail apparel sales were 3.4% higher in April 2021 than in 2019, and over 700% higher than the lows reached during the main pandemic period in April 2020.¹⁷⁷ Retail sales in China also reflected a similar story, up 2.5% on April 2019 levels.¹⁷⁷ This had a dramatic effect on export volumes, and when considered on a month-by-month basis, the volume of wool shipped during the month of March 2021, exceeded the volumes shipped during the same time period for the last three years.

Fine and superfine wool generally account for approximately 60% of the total value of greasy wool exports.¹²⁹ Exports of fine wool (19-micron and finer), increased by 2% year-on-year in 2020-21, in-line with the increase in the total volume of exports. The export value of these fine and superfine exports fell by 13% however, it was the broader-type wools which bore the brunt of the downturn, with the value of exports between 21-24 micron down 49% year-on-year.¹²⁹

Outlook

Looking ahead, a recovery in demand for woollen apparel in key markets will provide much needed relief for the NSW wool industry. Demand from China and Europe is expected to continue to increase as mills and manufacturers look to increase depleted inventories in preparation for the Northern hemisphere winter. While the increase in demand will push prices up, this recovery will likely be uneven and subject to ongoing COVID-19 control measures. This will result in a relatively modest increase in price with the EMI expected to plateau at around the 1,300 to 1,400 cents per kilogram level.⁸ ¹⁷⁷

The domestic supply of greasy wool will continue to grow over the short to medium term due to the positive impact of good seasonal conditions on wool yield and the gradual increase in shorn sheep numbers as farmers retain stock.