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Australia’s wool clip forecast down

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Australia’s wool clip is forecast to be down to the lowest level in almost 100 years, mainly due to the drought. ABC Rural reports on the latest from The Australian Wool Production Forecasting Committee that has forecast the clip to be down by 12.7 per cent on last year — a drop of 43 million kilograms, and the lowest yield since 1924 when the Australian wool industry was much smaller.

As drought grips many of Australia’s wool growing regions, farmers are destocking to reduce how much they have to spend feeding their animals.

Committee chair Russell Pattinson said, while there were fewer sheep to shear, the industry was also receiving less wool per sheep. “There’s one critical factor and that is the ongoing drought conditions in large parts of Australia’s wool producing regions,” he said.”We’re looking at a 7 per cent reduction of the sheep shorn and a 4.5 per cent reduction in the average cut per head.

“South Australia has been very significantly impacted — we’re looking at a 10 per cent reduction there — and Queensland has been suffering drought for some time now and they’re also 10 per cent down.”

Next shearing season is not looking any better, with the committee’s initial forecast for the 2019–2020 period down again, this time by 4.5 per cent. For shearers in drought-affected South Australia, the drop in the number of sheep is an issue for their businesses. EP Shearing owner James Boylan said his company serviced most of the state and the number of sheep he had shorn had fallen by at least a quarter.

“You feel sorry for the station owners because it’s their livelihood as well as ours,” he said. However, Mr Boylan said some areas were doing much better than others. “Areas like the South East in South Australia, where they had one of their best years ever, the sheep numbers are average or above average,” he said. “But then you go across to the Gawler Ranges and they’re seeing some very dry times and they’d be 50 per cent down on normal numbers.”

But it is not all bad news. The WA clip was reduced by 7.2 per cent on last year, but general manager of agricultural services company, Primaries of WA, Andrew Lindsay, said that was not an indicator of a reduction in numbers, instead attributing it to lower fleece yields because of a challenging season and a bumper year in 2016.

“We’re seeing now that people’s intentions are positive around livestock and keeping them, and possibly even increasing them,” he said. He said a silver lining to the reduced clip was that it offered some confidence the high prices would remain reasonably steady into the coming season.

“I think in terms of decision making, my view is that the low supply will be positive for wool prices in the future,” he said. “I’m not saying they’ll go up, but I think it’ll certainly put a floor under wool prices.

He said if the eastern states were to get a good start to the season and start rebuilding their flock, it could also provide opportunities for WA’s lamb market — if price pressure on the Eastern Market Indicator rises above that of the Western Market Indicator.

But the severity of the drought meant there was not enough ground cover to prevent erosion, meaning a lot more dust in wools.  Michell Wool CEO, Steven Read, said some of the wools they received were more dirt and grease than wool.”We’ve got fleece wools coming in here that are 55 per cent grease and dirt and 45 per cent of fibre. Typically, those wools can be 60 to 70 per cent yield,” he said. While wool yields this season are forecast to be down almost 13 per cent, Mr Read thought that may be too conservative.

He said, because of the high prices for wool, if farmers were destocking they would normally shear their sheep first before selling them for meat. He argued that meant the figure did not show the actual loss to Australia’s ability to produce wools.

However, Mr Read said he was optimistic about the sheep industry considering the historically high prices for wool and meat. “Former droughts that many of us have seen you’ve seen low wool prices and sheep of no commercial value. Once the drought breaks we’ll see people getting back into sheep and rebuilding their flocks purely for economic reasons.”

Source: ABC Rural

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