Month: May 2017
There were approximately 37,000 bales rostered for sale this week, offered in all three selling centers. The market continued to ease slightly in the merino categories but held relatively firm in cardings and xbreds. It appears as though China have “gone quiet” with it difficult to even get counter offers back some of the major Chinese agents. This is not unusual for the time of year, with limited volume coming to market over the winter period, some major processors take the risk of sitting out and hoping the market comes back. I call this a risk, because the longer they sit out for the more pressure they put on themselves to secure quantity in the future, and too much pressure on the buy side will force prices straight back to where they’ve come from.
From a growing point of view it’s really important to remember that fine merino prices are still excellent on historical standards. With 17.5 trading around 2200 cents clean it works out to be roughly $70 per head in wool value (subject to yield, kgs etc) and with mutton, surplus sheep sales at near record levels it is a far more encouraging time to be a wool grower.
We often discuss the varying premiums and discounts depending on the direction of the market. With demand being a touch soft right at the moment the discounts for “off types” or anything that’s not prepared appropriately will start to increase. It’s a good opportunity to reinforce the message to keep preparation standards high to capture the best prices available.
The four week forecast currently has the week beginning the 7th of June as only having 25,000 bales up for sale – it’s rare to see quantity so low in a week, and this could change as we get closer to the time. It does give us a taste of how supply will drop off shortly, and China can’t sit out forever.
As I’m sure everyone is aware the Campbell Town Show has come round again. It is on the 2nd and 3rd of June. It is a great opportunity to see some examples of the states wool and sheep production. I look forward to seeing some readers there next week. Please forward any questions to email@example.com
Last week I returned from the 86th IWTO Conference, this year held in Yorkshire in northern England. The conference this year was titled “Wool in the digital age” and while there were many different themes to this, I would like to focus on one part that I found particularly interesting.
Much of the wool we produce ends up in the apparel industry; it is the apparel industry that I would like to talk about.
Maybe you have heard of the term fast fashion and the subsequent phrase; slowing down fast fashion? If you are anything like me, you have probably heard these terms but don’t necessarily have an understanding of what they mean outside the obvious. So firstly some facts on the world apparel market and the role natural fibres can play in reversing some of the alarming statistics.
- The apparel industry is now the 2nd largest polluting industry in the world behind the oil industry.
- In the UK alone, 2 million tonnes of garments are purchased each year, while 1 million tonnes of old garments are discarded with 50% ending up in landfill.
- In the US on average each consumer purchases 75 new garments per year compared with 25 in 1960.
So what relevance is there here for the wool industry? Most of these products I refer to are oil based, polyester garments that are produced and subsequently sold cheaply as a way of keeping up with this fast fashion movement.
As consumers become more aware of the sustainability of the products they purchase in an attempt to slow down fast fashion they will be more focused on selecting better value for money garments. These may cost more per item, but treated correctly can last for years, therefore costing far less per use.
None of this even takes into account the life cycle of man-made versus natural fibres post wearing.
There is a number of interesting videos available, one in particular is put together by Alex James title Slowing Down Fast Fashion and can be found online.
To the wool market, sales opened on Wednesday this week with all three centres selling. Early quotes suggest the market has levelled after last Thursday’s correction with only minor movements either way across the whole spectrum. At this stage next week we see 39,000 bales rostered before contracting to low 30,000’s for the following weeks.
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This week saw 40,000 bales offered nationally selling on Wednesday and Thursday in all three selling centers. The market opened strongly on the reduced volume with all merino categories rallying between 30 and 60 cents clean in early trade. Better types were most affected with high nkt, low vm very keenly sought. This was particularly apparent in the skirtings, with the Tasmanian offering selling exceptionally well, because of the light fault. Important to note the xbreds also firmed slightly in a small offering. Interestingly one large Tasmanian xbred clip was bought heavily by one of our Tasmanian origin brand partners, for a 100% Tasmanian order. Great to see the work we’re doing developing Tasmanian Merino is now carrying across into other types.
Supply drops off pretty quickly from here on in with offerings in the mid 30,000 bales, this should help underpin any downside in the short term. Plus the fact that a lot of the major exporters are on the right side of the market, i.e many have been trading profitably during the recent rally. Making up for those that were caught by the rise earlier in the season and lost a bit of money. From a grower’s point of view we need the exporters trading profitably to give them confidence to continue selling into this rising market and diminishing supply, which should again limit any downside.
I’m writing this report from the 86th International Woollen Textile Organisation (IWTO) conference in Harrogate, UK. With around 250 participants from every country involved in the wool trade. The mood is positive from everyone I’ve spoken to which is great. There is a lot of talk about the market into the future with several different opinions. Most feel it should remain strong for the short term, but that growers should still sell into this market straight away, rather than holding out for higher prices.
It’s wonderful to be involved in this event and to engage with people from around the world that share the common theme that they love this fiber and this industry and are glad it is making somewhat of a resurgence. If nothing else it demonstrates that no matter what field you want to work in there’s something for everyone in the wool industry; Design, finance, manufacturing, farming, marketing, media, economics and on it goes.
We’re hoping to consolidate our work around Tasmanian Merino during and after the conference and we look forward to reporting back to Tassie growers when we return.
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