The Australian Wool Market, Raw Wool Quality and Wool Prices Chris Wilcox Chairman, Market Intelligence Committee International Wool Textile Organisation ASI Wool Council 28 th January 2016
Topics The Australian wool market recent trends Production Prices Exports Structure of Australian wool selling system Raw wool quality management in Australia The effect of raw wool attributes on prices
Australian Sheep Numbers and Wool Production at Long Term Low Wool (mkg greasy) 1100 1000 900 800 700 600 500 400 300 200 100 0 Wool Sheep (million) 180 Sheep 160 140 120 100 80 60 40 20 0 Source: Australian Wool Production Forecasting Committee, ABS, ABARES Wool production is shorn wool; sheep numbers are as at 1 st July Updated for forecast December 2015
Australian Wool Prices Rising Ac/kg Ac/kg 1,800 1,600 1,400 1,200 1,000 800 2,308 Ac/kg 1,800 1,600 1,400 1,200 1,000 800 600 400 EMI 18 micron 600 400 21 micron 200 0 200 0 28 micron Merino cardings Source: AWEX Prices to 22 nd January 2016
Australian Wool Export Destinations Shift to China 1991/92 (785 mkg greasy) 2014/15 (357 mkg greasy) Belgium 3% Fmr USSR 4% USA 5% South Korea 6% Germany 6% Others 17% Taiwan 7% Japan 17% France 9% Italy 14% China 12% South Korea 3% Czech Rep 5% Italy 4% India 6% Malaysia 2% Egypt 1% China 75% Others 4% Source: ABS
The Australian Wool Auction System Wool Grower Wool Wool broker Wool Testing Auction Wool exporter or processor Farm supplies, advice, market information, risk management
Quality Management in the Australian Shearing Shed 1. Shearer and shed hands Training (AWI-funded) 2. Woolclassers Registration and training AWEX Code of Practice reviewed every 3 years Registration Review Committee Classer s specification 3. National Wool Declaration Mulesing status Dark and medullated fibre 4. Broker advice
Classer s Specification and the National Wool Declaration Description of the shed-classed wool (fleece, bellies, skirtings, etc.) separated by lambs, wethers, ewes, etc (called mob breaks) National Wool Declaration - Mulesing Status and Dark and Medullated Fiber Risk. NOT COMPULSORY Mulesing status CM Ceased Mulesing NM Non-mulesed PR Pain relief M - Mulesed Dark and medullated fiber risk Contact with shedding breeds Crutched in within 3 months of shearing
National Wool Declaration Shares 2015/16 to December Ceased Mulesed 3% Non Mulesed 9% No Declaration 47% Pain Relief 21% Mulesed 20% Source: AWEX
Wool Receivals 35 wool warehouse locations operated by auction brokers around Australia: 20 in NSW 10 in Victoria 2 in WA 1 each in SA, Tasmania and Queensland. Three selling centres Melbourne (1,014,263 bales offered in 2014/15) Sydney (562,402 bales) Fremantle (385,567 bales) Weekly sales (45 per year) Tuesday/Wednesday/Thursday
Objective Measurement - Samples and Testing Sampling and testing by AWTA Ltd. according to standards set down by the International Wool Textile Organisation Tested and measured for micron, yield, vegetable matter. Additional measurement Samples taken in wool handler s warehouses Grab samples also taken for display for inspection by buyers
Lotting, Interlots, Bulk Classing All selling & lotting decisions are made from the classer s specification which includes the National Wool Declaration Farm bales are either P (classed by a registered classer) or D (not classed by a registered classer) certificate Any lines that are unsuitable for auction are interlotted or re-classed Bulk-class wool is re-classed and mixed with wool of the same characteristics, to make larger, more marketable lines of wool Bulk-classed wool is either Q (classed by a registered classing house) and B (not classed by a registered classing house) certificate Interlots are I certificate
Number of Bales Tested by Class 2014/15 Grower Wool - registered (P cert) Interlots (I cert) Bulk-classed - non-registered (B cert) Grower Wool - non-registered (D cert) Bulk-classed - registered (Q cert) 2% 8% 7% Total: 2,053,132 Bales 13% 70% Source: AWEX
The Most Significant Factor Fiber Diameter Micron Price Differentials % relative to 21 micron wool % difference % difference 80% 10% 60% 18 micron 19 micron 0% -10% 40% -20% Average since 2006 20% 0% 06 07 08 09 10 11 12 Average since 2006 13 14 15 16-30% -40% -50% 06 07 08 23 micron 26 micron 09 10 11 12 13 14 15 16 Source: AWEX, Data to 22 nd January 2016
Factors Affecting Price at Auction Southern Region Week ending 15 th January 2016 Example Ac/kg clean 19 micron fleece wool, 80mm, 1% VM, 35N/ktex 40-60% mid-break Additionally Measured P cert Base price Strength (N/ktex) Length (mm) VM (%) No AM* Midbreak Cert 42 28 100 60 2% <40 Q 1450 +15-15 -35-70 -15-80 +15-50 Source: AWEX * AM = Additional Measurement
Questions?