Tasmanian wool growers receive best returns in decades

RECORD HIGH: Australian wool growers receive best returns in decades for their product. Picture: Paul Scambler
RECORD HIGH: Australian wool growers receive best returns in decades for their product. Picture: Paul Scambler

Tasmanian wool growers finished 2017 on a high after enjoying some of their best returns in decades and a 30 per cent jump in wool prices.

The AWEX Eastern Market Indicator hitting an all-time high of 1681 cents per kilogram in November 2017, according to Rural Bank’s latest Australian Wool Update.

Combined with the increase in wool prices year-on-year, it made 2017 a good year for wool growers.

The Australian Wool Update showed the country’s wool industry has had exceptional growth over the past three and a half years.

Wool production is forecast to stay at its historic low of 340 million kilograms in 2017/18, with the slow process of increasing flock sizes ensuring a large wool price drop is unlikely.

Rural Bank Agribusiness general manager Andrew Smith said he enjoyed seeing the Australian wool market in such robust health after another record-breaking year for growers.

“The fundamentals of the wool market remain favourable for our wool producers,” Mr Smith said.

“Strong export demand from China and Italy - especially for fine merino wool - combined with declining wool production, has resulted in a record surge in the price of wool, and a windfall for Aussie wool growers.

“All indications are that these market conditions will continue well into the future, as domestic production is not expected to increase enough in volume to significantly affect prices for years to come,” he said.

Increased demand for Australian wool from international markets during 2017 meant the value of wool exports grew by $355 million year-on-year.

The Chinese market is a significant driver of this increased export demand for Australian wool.

Almost 80 per cent of all Australian wool exports during 2017 were bound for China and this trend looks set to continue as demand for woollen products rises in parallel with Chinese incomes.

Chinese household incomes and consumption rates accelerated this year, prompting the World Bank to lift its 2017 forecast for China’s economic growth.

Fine wool has become an even more valuable commodity.

“The demand for superfine wool in high quality clothing has been increasing internationally, and this trend has prompted wool growers to target this market segment,” Mr Smith said.

“Aussie growers are taking advantage of clothing manufacturers’ need for superfine wool, as well as the demand from China’s burgeoning middle classes for higher end clothing,” he said.

Read the update at www.ruralbank.com.au/wool