Decline in Australian Clip Predicted

January 6, 2006 -- Fears are growing in Australia that apparel-wool supplies could fall significantly because sustained low prices are driving growers into other sources of income.

Peter Morgan, executive director of the Australian Wool Industries Secretariat, which represents exporters, processors and private-treaty merchants, told the Wool Record, ?I can see a really big drop coming in the Australian clip in 2006/200707, perhaps as much as 20-30 million kg. I hope I am wrong but the seriousness of the situation. People are going out of wool in large numbers and the anecdotal evidence is increasing all the time. I am worried sick about what will happen if the market continues to slide. I don?t think the international pipeline understands just how frightening the situation has become.?

A 30 million kg. decline in Australian wool production would take 6 percent off the latest estimate by the official forecasting committee, which last month revised slightly downwards its expectation for 2005/2006 ? from 470 million kg. greasy to 467 million kg. Production in 2004/05 totaled 475 million kg.

?The likely future is a further, and possibly major, decline in wool production unless there is an upward movement in prices,? Chris Wilcox, chairman of the International Wool Textile Organization?s market intelligence committee, reported.

Poor clip preparation is reported to be increasing. Buyers have expressed concern that because of unsatisfactory prices, short cuts will be taken. In some cases, with the industry depressed, shortages of experienced wool-shed staff are to blame for sliding standards.

Reprinted in part from The Wool Record Weekly ? Market Report