SpinExpo: Can the world afford Australia’s wool price rises?

AUSTRALIAN wool growers will get key feedback within weeks on whether the recent auction price rises can continue to be afforded by downstream processors and retailers.

Australia’s benchmark wool price indicator soared to a new record level this week, underpinned by medium Merino wool price rises of 70-100 cents a kilogram clean.

International wool consultant Jimmy Jackson said apparel retailers and brands are now becoming bemused at the continued wool price rise and are starting to be concerned whether they will be able to maintain wool in their product offers for next season.

Mr Jackson’s firm Jimmy Jackson and Associates, works for some of the world’s largest processors of wool and he is in daily contact with many of their apparel retailer and brand customers.

“I think an initial assessment as to the extent of these concerns can be judged during forthcoming international trade shows such as SPINEXPO which will kick off in Paris next month followed by shows in New York and Shanghai.

“At these shows, manufacturers will present their Autumn/Winter collections for 2019/20 (Northern Hemisphere) which is the main market for wool,” he said.

“But more importantly, it is the time when manufacturers of yarns, fabrics and garments announce their new prices to retail buyers, of course, this year prices are expected to be higher.

“It will be interesting and useful to gauge the customer response.”

Click here to get the latest Sheep Central story links sent to your email inbox.

Mr Jackson said there is a keen interest among retailer and buyers for wool, and they are endeavouring to see how they can maintain its use in their range.

“But they have to explore ways of how they can pass on the price to their customers the consumers.

“One way many are starting to explore is a traceability story, i.e. from “sheep to shop” or “fibre to fashion” or however you want to call it,” he said.

Mr Jackson said retail buyers now tend to have a much better appreciation of wool’s inherent natural, biodegradability and renewability benefits.

“I think the current issue with plastic waste is helping us.

“So as long as the price does not continue to skyrocket and remains fairly stable around the current mark, I am confident,” he said.

“But I do worry a bit going forward with regard to the supply side, particularly with the onset of drought in many wool growing areas.”

Mr Jackson said he is not sure if anybody including the wool industry is yet too concerned about or taking seriously the impact of worsening trade due to a tariff war.

Trade tariff war “the fly in the ointment”

Elders district wool manager at Hamilton, Andrew Howells, said it is expected that if the current wool prices can’t be passed on down the supply chain there will be fewer orders and the market will correct.

He said the indications were that wool garment retail conditions were still good, although the only “fly in the ointment” was whether the trade war tensions would affect wool garment retail sales.

“Maybe it will, maybe it won’t, but it is never good.”

After the United States recently announced increased tariffs on Chinese goods, China, the European Union and India also announced tariff increases for US goods.

“In terms of current demand and current supply, you would think that these prices are going to be pretty solid,” Mr Howells said.

Endeavour Wool Exports owner Josh Lamb said there was not a lot of “concrete worry” about trade tariff impacts.

“There is definitely a concern in China, but it’s an over-arching concern about where America and China go in general, not with wool specifically.

“But if it went further along, then it would have some effect on the wool market later, even just from the sentiment point of view,” he said.

“But at the moment we are not seeing any direct effect at all.”