4 June 2015

Wool stockpile cleared as prices surge to four-year highs

- Share -

By ABC Rural - By Catherine McAloon

Stockpiles of Australian wool are being cleared out as prices surge to four-year highs. Farmers are pocketing hundreds of dollars in better returns for their bales.

Prices at wool auctions have been inching higher in recent weeks and added more than 50 cents per kilogram in some micron categories at sales in Sydney and Melbourne on Wednesday.

Wool trader Chris Kelly, of Australian Merino Exports, who was buying at this week's Melbourne auction, said wool supply had reached critical levels for processors, forcing them to pay high prices for the reduced market offering.

"The stock levels held in Australia by the grower, by the exporter, by the broker and also the top maker is quite small now," Mr Kelly said.

"They've exhausted all those now, so it's very much hand to mouth. Whatever is produced at the moment is being used quickly, because they have to replenish their stock positions and that's what we are seeing recently.

"It's been a hell of a sort of three or four weeks, where it's just consistently gone up each day, between 30 to 50 cents and the same trend was today."

Mr Kelly said that, for the short term, wool prices looked set to remain high, with no big sales scheduled before a winter break.

"South Africa, another wool producing country, they have a 10 week break now, so there is no wool to be sourced from there," he said.

"New Zealand is also quiet, so if anyone wants to get their wool they have to get it from Australia and we are also having a small sale, so it certainly looks pretty good short-term and it's helped on the back of a very low Australian dollar."

Peter Maher, trading manager with wool brokers Fox and Lillie, said with increased demand, particularly from China, maintaining the current price would depend on the volumes of wool offered for sale in spring.

"Numbers are saying to us that maybe the offering in the new season may be a little bit down, and from there, depending on the demand from overseas, which is pretty constant and real at the moment, prices at the current level could be sustainable," he said..

Wool bales being moved at a warehouse in Melbourne, in preparation for auction. Stockpiles of wool are being cleared as wool prices reach four-year-highs.
Cath McAloon
Competitive, Proven, Trusted
Greasy Wool Greasy Wool Greasy Wool