Wool Prices Up on Critical Mass Fears

While the wool market has taken a sharp jump there are fears Australia wool may be close to losing its critical wool mass due to low flock numbers.

In its fourth consecutive one-day sale, the Western Market Indicator rose to 805 cents, its highest level in 10 months, but with another low offering forecast for this week, analysts have warned about Australia's low production levels.

Wool production has fallen to its lowest levels in 93 years and, according to Meat and Livestock Australia, the national sheep flock has fallen to 72 million head. Fewer than two million bales have been forecast to sell in Australia this year, compared to 4.5 million bales three years ago. This is an 8 percent drop in production on last year.

Westcoast Wools managing director and Australian Council of Wool Exporters and Brokers committee member Luke Grant said he was worried Australia had already reached critical mass for wool production.

"If we keep at this slaughter rate, analysts have said we will have no clip by 2014," Grant said. "I am in no way against the live export trade, but the prices are so high farmers are not looking into the future, they are taking the high prices in their hand."

Australian Wool Industries Secretariat executive director, Peter Morgan, said despite the lowest production since 1916, Australia still produced more apparel wool than the rest of the world combined.

"When you look at all the factors around, it has been a tough 12 months," Morgan said. "When you start to lose income, like we have seen across the globe, then spending is affected. Discretionary spending, like clothing, is suspended, and wool is a very elite fiber, which is on that end."

Reprinted in part from Farm Weekly, Australia