Tasmanian Wool Prices Rise After Five Years

Market News

Tasmanian Wool Prices Rise After Five Years

Good seasonal conditions and higher prices are giving Tasmania's wool industry a much-needed boost. Wool prices have surged to levels not seen for about five years and, particularly at the fine & superfine end of the market, they are rewarding producers who stuck with the industry.

Allan Phillips, a wool producer at Deddington, near Evandale, said after a couple of very difficult seasons this year was a welcome relief. "This season is just fantastic compared to the last couple, which were pretty tough,'' he said. While prices for medium micron categories have been reasonably solid for the past few years, a lift in demand for fine and superfine wool is bringing renewed confidence.

"I'm feeling more positive than I have for a number of years," Phillips said. "We are starting to see some differential in the market for the first time in a long time. There was an increase in 2011, but that was just one year and it was back in 2008 that we really saw the last big differential between the prices for the middle microns and fine and superfine."

The Rural Bank's wool update for November said a wet spring, lower feed-grain prices and forecasts of good summer rainfall were encouraging.

Australia's wool production for the year to October was 6.7% lower than the same time last year. But the Eastern Market Indicator wool price is 6% higher than November 2015. Rural Bank and Rural Finance agribusiness general manager Andrew Smith said great conditions and higher prices ensured an extremely positive longer-term outlook.

"With above average rainfall expected to continue for most of the country right through the summer, we expect improving global demand for wool and flat global wool production to continue to support higher prices," he said. Smith said the national clip was expected to be lower in 2016-2017, down to 325,000 tonnes but so far seasonal conditions had seen above average wool cut per head.

The value of wool exports for January to September was 13.6% higher than the overall five-year average. In September export volumes were up 20% from the same month last year.

The report also showed the wet had delayed shearing this year, with a large proportion of wool that would normally have been sold a month ago only now coming to market. Phillips said the excellent conditions would most likely make the clip across the country broader this year.

He said there had been "a big exodus" of superfine growers nationwide in recent years but the gap had been filled to some extent by medium-wool sheep. "The prices we're seeing now are being driven by supply and demand," he said.