Australian Wool Production Seen at 80-Year Low

October 31, 2008 - Total Australian shorn wool production is forecast to decline in the 2008-2009 season, reaching an 80-year low of 387,000 tons despite good summer rains and improved average cut per head.

In 2008-2009, the total supply of wool is forecast to be 424,000 tons of which shorn wool production will be 387,000 tons, 3.3 percent lower than 2007-2008, according to the independent economic research agency, Australian Bureau of Agricultural and Resource Economics.

High global grain prices and continued dry conditions in some parts of eastern Australia are contributing to a smaller size of the national flock, resulting in a lower overall production.

China is, and will continue to be, the largest consumer of Australian wool accounting for two-thirds of the country's wool exports. However, supply constraints in 2008-2009 will lead to a slash in volume of raw wool shipments. The volume of Australian wool exports is set to decline to 459,000 tons - a fall of 6.7 percent from last year. Export earnings are forecast to fall by 12.8 percent to $2.4 billion.

The effects of the U.S. economic turmoil have hit consumer sentiments in Organization for Economic Cooperation and Development economies.

Expectations of weak future demand for woolen products in the United States and the European Union are likely to lead to a softening of demand for raw wool in 2008-2009.

This will exert a downward pressure on prices.
Reprinted from Hindu Business Line, India

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