AU Wool Production Drops

October 6, 2006 - The drought is being blamed for an estimated 6-percent drop in wool production across Australia this season.

Australian Wool Innovation (AWI) says the latest figures predict shorn wool production in the 2006 to 2007 season to fall 27 million kilograms to 434 million kilograms because of a lack of rain, pasture growth and the fact that there is no end to the drought in sight.

Another concern is in fact the capacity of farmers to provide water to their stock, and on top of that of course there are cash flow factors which will make it difficult.

The dry conditions are forcing many sheep farmers to begin their shearing earlier than normal. And the bigger supply is hurting wool prices with the market suffering its biggest drop since April.

Tony Kidman from Quality Wool says many farmers can not afford to store wool until prices rise.

International factors are also affecting wool prices. Bill Cowley from the Australian Wool Network says the market drop is disappointing, especially when the Australian dollar is weaker.

"China does most of its business in U.S. dollars and when we see the U.S. currency fall, we would normally see a firm to slightly dearer market here in Australia, but the bids that are coming from the Chinese at this particular time are getting lower and lower and there's some resistance to the higher price that they are having to pay in the United States," he said.

"The price that they are paying in U.S. currency is at the top of the range that we've seen for the last two or three years."
Reprinted in part from ABC Australia

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