A Look at Wool and Pelt Value Drivers
December 2, 2016

The Nov. 19 issue of the Livestock Monitor published by the Livestock Marketing Information Center included the following report about wool and pelts.

In recent weeks, Australia has sold fine wool for at or above $5 per pound (clean price in U.S. dollars), that is up fully 50 cents from early this year and a year ago. USDA's Agricultural Marketing Service overhauled pelt-price reporting and categorizations at the beginning of this year, so longer-term comparisons are not possible. Supreme quality unshorn U.S. pelts were at $7.50 per pelt in recent weeks, up $2.50 from this year's lows posted in September. Still, this quality pelt averaged $10.63 at the beginning of 2016.

Looking ahead, there are cross-currents causing uncertainty regarding the longer-term direction of wool and pelt prices.

The United States relies on exporting wool and pelts. Looking at the big picture, several factors are shaping the world wool markets. Wool prices globally are largely dominated by Australian production, especially the fine clips. On the world stage, questions regarding wool demand center on Chinese purchases. Australian production has recently been dampened by drought-forced flock reductions. Though recent rains have improved pastures in that country, it will take some time to increase wool production to levels of recent years. Chinese demand has been an issue in recent years as their economic growth rate has slowed from the frenzied levels just a few years ago. Sales to China can be quite volatile. Still, personal income growth in China is a longer-term bright spot for wool and pelt prices.

Also, wool faces stiff competition from alternative fibers, especially manmade items, and new developments continue in that sphere. Counteracting that somewhat, in the United States and some other countries, is interest in natural fibers, wool blended fibers and local production of specialty wools.