Tell the world how much wool we have, says analyst

Sheep Central, August 7, 2020

AUSTRALIA’S wool industry should publish regular estimations of its bale stocks, according to Independent Commodity Services market analyst Andrew Woods.

The nation’s wool stockpile is expected to grow further as growers reacted to a major drop in the prices this week by passing in more than 30 percent of the 42,764-bale offering.

This has again raised questions about how much of the fibre is being held in broker stores and on farms, and would growers, traders and end-users benefit from knowing industry stocks on hand.

A quick Sheep Central survey of several industry leaders today across broking, storage and handling didn’t yield anyone willing or able to give an accurate overall estimate of how many unsold bales are in stores on hold awaiting a recovery in prices or on farms.

Mr Woods believes the industry should recommence the discontinued practice of reporting its wool stocks on a weekly basis, even down to quantities in broad categories.

“Yes, I’m not a marketer, but I would imagine the first good thing about marketing would be tell our customers what we’ve got in supplies.

“It amuses me the idea that ‘if you don’t tell them they won’t know’, you’ve got to be joking.

“There are some smart operators among the exporters and down downstream,” he said.

“You don’t think they don’t work it out?”

Mr Woods said advantages of wool stock reporting would be transparency for better planning by customers.

“It’s making things more transparent so they can plan better.

“The traders won’t like that because with less transparency there is more room for arbitrage and wider margins,” he said.

“I just think the industry needs to be upfront, because the smart guys are going to work it out.”

Apart from sold wool stored, Mr Woods said the unsold stocks in the system generally comprised bales being tested and catalogued for sale, and then the lines already tested and designated to be held for later sale, either in store or on farms. He is not always convinced that there is as much wool held on farms as is generally believed.

“If you talked about it in terms of percentage of production, in the order of 20pc of production is what I think we would be holding now, about 300-350 bales, something like that.”

National Council of Wool Selling Brokers of Australia executive director Chris Wilcox said the seasonal shearing still has to happen and obviously if wool isn’t offered or is unsold then the amount of wool held in storage will grow.

Immediate future for wool is ‘uncomfortable’

However, Mr Wilcox said the level of price pressure the re-offering of unsold wool would put on the market is uncertain and would depend on the extent of any recovery in global consumer markets.

“In June we had a small improvement year-on-year in the amount of wool exported from Australia by about 3pc, which is only small, but is an improvement and due to increased exports to China.

“So if demand goes back to where it was in December last year, it wouldn’t take much to absorb that extra wool.”

Mr Wilcox said unfortunately the immediate term future for wool is “uncomfortable.”

“But there are possible signs that things might be improving towards the retail end and hopefully through to order through the garment makers, knitters and weavers, particularly in China, and help move things through.

“There are some anecdotal reports to suggest that there has been a small pick-up in the order interest from retailers in China and in a couple of other countries around the world,” he said.

“But it’s like trying to read tea leaves – or looking for green shoots if you’re a Carlton supporter.

“You can’t say it’s statistically important yet, but we’re probably closer to the end than the start.”

Wool market improvement depended on consumers being able to get out and spend, he said.

“One thing we do know is that the apparel and textile sector in general, but particularly apparel, has probably been hit harder than many other retail sectors, and that’s the cause in this significant drop in demand.”

Wool market suffers severe losses

AWEX senior market analyst Lionel Plunkett said the Australian wool market suffered severe losses this week.

Sales resumed after the annual mid-year three-week recess and as this was the first selling opportunity for nearly a month, the offering increased to 42,734 bales, 7,502 more bales than the previous sale (Week 2).

“As the market opened in the Eastern centres on the first day, it was immediately apparent that large price reductions were on the cards.

“The individual Micron Price Guides (MPGs) in the east fell by 110 to 173 cents with all types and descriptions affected,” he said.

“On the back of these losses the AWEX Eastern Market Indicator (EMI) fell by 101 cents, the largest daily fall in the EMI since August last year.

“The EMI lost 8.9pc for the day, the largest daily percentage fall in the EMI since 2003,” he said.

“On the second day of selling prices continued to fall, but at a less dramatic pace than was experienced on the first.

“The MPGs in the east dropped by a further 13 to 57 cents and the EMI lost another 27 cents.”

Mr Plunkett said the EMI’s ultimate drop of 128 cents to 1006c/kg clean was the highest weekly fall in the EMI since April (when it lost 155 cents).

“However, when viewed in percentage terms the EMI fell by 11.3pc, the highest weekly fall since 1991, when the floor price was abolished and the EMI fell by 39.1pc.”

He said the large drop in price understandably pushed the passed-in rate up nationally to 30.1pc, after 9.4pc was withdrawn before selling started.

“The skirtings followed a similar path to the fleece, and prices were generally reduced by 80 to 120 cents.

“The crossbreds suffered losses of between 35 and 82 cents, and when viewed in percentage terms these losses were similar to the Merino fleece.”

The national quantity reduces next week to 33,413 bales, Fremantle only requires a one-day sale and will sell on Wednesday.


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  1. Donald Cameron, August 8, 2020

    AWI has much to answer for,
    as do the various recent Federal Ministers for Agriculture
    who do little more than bleating,
    while sitting on the fence…

  2. Lloyd Dunlop, August 8, 2020

    Never tell buyers what you have in store as they will use it as leverage on price.
    No buyer willingly pays more than his competition on the same sale on the same day.
    Knowing what is in store is of more use to producers and their decision-making than to buyers who are awaiting a feast of low prices.
    Any buyer in control of more than 30 percent of your product is in control of your product. How much does China buy again?

    • Jim Gordon, August 8, 2020

      Loyd Dunlop, how do we break this cycle of smoke and mirrors. The wool buyer is not our enemy. We need to be upfront so the trade can plan for the next two years. We have to work together.
      The retail shelves are still full of last year’s clothing. The trade will pay if they can sell the apparel.
      The trade have a very good understanding if they screw the grower, he or she will change enterprises and the supply will disappear. Think about how much money China has given the wool grower over the last six years. Why are we wanting to belt them?
      Thank God some of the growers have withdrawn their wool. The trade are doing a fantastic job handling the wool that is being presented, considering they can’t move it.
      We have a year’s supply put away now. Supply and demand must control the market.

  3. Peter Small, August 7, 2020

    May I draw readers attention to an article I wrote on Sheep Central on the 16th October 2019, particularly the last paragraph?
    And yes, Andrew Woods and Jim Gordon, the more transparency the better any market operates. Well-recognised, but perhaps not by our industry.

  4. Jim Gordon, August 7, 2020

    Mr Woods, how do we make you captain of the team? Using words like transparency, better planning for the customer,’the industry needs to be up front? Why can’t we make this happen? I suspect, because of bloody self interest. Paul Keating said everybody is in it for themselves. Surely, we can move forward with some cooperation, between everyone.
    Mr Wilcox, yes, seasonal shearing still to come in and a big season coming into play as well. Prices being “uncomfortable”, a bit like a rectal examination, not good, but one has to get use to them.

    • Peter Small, August 7, 2020

      How about you, Jim Gordon becoming captain of the team? Whilst I am sure Andrew Woods would also make a good captain. We do need a wool grower who is young and fearless. Someone who is not intimidated by AWI and its statutory power and privilege. Wool growers can either rally behind a fearless leader or risk our industry disappearing into oblivion. It is that serious.

      • Jim Gordon, August 8, 2020

        Peter, it’s on, I will try and inform the levy payer the truth. The mulesing issue is front and centre at the moment. We’ve got the right sheep that will make Mark Pearson, the welfare groups, Adam Marshall and the wool growers happy. No flies, no mulesing and more lambs.
        Somehow, I’ve got to get Mark Pearson and the wool growers to bend a bit. I am going to try to meet with Mark, and the lack of chemicals to cope with a fly wave might persuade wool growers to revisit the genetic solution.
        The breech and flies are getting all the attention, but as soon as you mules, you fix the breech. However, the flies then move to the body. Wrinkles are the problem and are so easily genetically removed.
        If I can keep telling the truth and what I say works, levy payers may listen. Let’s hope.

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