DESIGNATED non-mulesed wool sales could interfere with the normal flow of wool onto the market and create a supply squeeze at other times, according to New England Wool managing director Andrew Blanch.
New England Wool is a major buyer of non-mulesed wool in Australia and its Italian owners initiated the industry integrity program SustainaWOOL, that was gifted to the Australian Wool Exchange.
Referring to plans to hold online and physical designated non-mulesed wool auctions this year, Mr Blanch said the sentiment to promote NM wool production is commendable. But he said NM sales have the potential to interfere with the normal flow of wool onto the market and the commercial activity surrounding the trading process.
“It could actually create a squeeze in supply available for trading before and/or after the nominated NM sale week.
“Flooding or starving supply is not a normal nor mature market situation,” he said.
“Of course, our company would attend such a unique sale and operate accordingly, but we would arrive at that sale with whatever orders we have in hand at the time and we would be operating within the ruling market conditions and forces at play during that week.”
Non-mulesed wool must be fit for purpose
Mr Blanch emphasised that NM wool must firstly be fit for purpose.
“It is not our company’s intention to compromise on quality just to deliver an NM product…..they must go hand-in-hand.
“This is why understanding what the premiums in the auction market for NM wool really are, is a difficult process,” he said.
“It is because there are so many variations of the wool types and processing criteria required by wool users all over the world, and prices can be completely distorted by the orders that are in the market on any given auction day, the selections available and market sentiment.”
Mr Blanch said NEW is advising, buying and attempting to trade NM types every week of the year as he is sure any of his competitors are doing.
“This will be based on many factors, including selections, enquiry from clients, what the market has done and what we expect it to do….it is an ongoing demand and offer scenario.”
Spotlight should be on weekly NM quantity and quality
Mr Blanch believes the industry should be putting a spotlight on the quantity and quality of NM wool on offer in any given sale week.
“The market needs to be mature enough to allow growers the potential to promote their product, but also the flexibility to offer/sell to their best advantage or needs.
“Surely the priority is to continue to promote the strong requirement coming from the customer for NM/CM wool,” he said.
“However, this can be done on an ongoing basis….not necessarily by creating a unique sale.
“I doubt very much that I could have all of the possible yearly NM orders from my clients all in my possession and ready to be covered at one auction.”
Mr Blanch said in the first three sales since Christmas, more than 30 percent of the Sydney selection has been declared as NM or CM (ceased mulesing) and 24pc of the Melbourne selection has been declared as NM/CM.
“Fremantle rates are approximately 6pc NM/CM, but the biggest issue in that state is the lack of declarations.”
Mr Blanch said promoting to growers the importance of declaring on the National Wool Declaration remains a huge priority for the industry.
“Based on Sydney and Melbourne offerings, there should be a great opportunity to promote Australian NM/CM wool to our customers and also ample supply to calculate and communicate the premiums to be found in the market for NM/CM wool, notwithstanding my earlier point about the difficulty in comparing apples-with-apples.
“I don’t think there is a need to over-complicate things,” he said.
“The industry has sophisticated data management systems that communicate accurate and timely daily NM/CM offerings, and exporters can promote, price and trade using this data as they see fit throughout the entire season thus satisfying demand as it eventuates.”
Non-mulesed wool demand is more than a trend
Mr Blanch said there is no doubt that the market wants more NM wool.
“It is more than just a trend, it is a reality and a constant requirement by our clients and their clients.
“Any possibility to push this message to producers and to promote NM wool on offer is welcomed,” he said.
“Our company and our Italian shareholders, whilst being fully aware of the issues involved, have been very consistent and very vocal about this requirement from the customer for many years and have delivered a number of initiatives aimed at supporting Australian growers moving towards a non-mulesed future.”
Mr Blanch said a growing number of NEW orders in the market each week are purely for NM wool, and/or we have premiums to pay for wool that is suitable for our types and is also NM.
“Contracted wool producers to NEW and our Italian shareholders are definitely in no doubt that the emphasis and preference is for a non-mulesed product.
“The majority of “contracts” available in the market for growers to utilise, if the quality of their wool is correct, are based on various quality schemes and/or the requirement to be NM/CM.”
Mr Blanch said every wool sale or auction in South Africa, New Zealand and South America is a designated non-mulesed wool sale; by default.
“Our efforts in Australia should be targeted towards strong communication to growers of the increasing NM requirements of the global customer community and supporting research into realistic, practical, acceptable and long lasting solutions to this issue.”