Oz wool price tops 700¢ break-even mark

By FWi staff

A FIVE-WEEK buying spree by manufacturers has propelled the Australian wool market past the 700¢/kg (260p/kg) threshold, widely regarded as the break-even point for Australias wool producers.

The key factor has been the pending Chinese import quota announcement of 60,000-80,000t of wool, equivalent to 500,000 farm bales.

The Chinese Governments delay in announcing the quota has only helped to fuel the market, as buyers clamor to secure stock in case there is a shortage later in the year.

The Eastern Market Indicator last week rose 31¢ to close at 713¢/kg.

As usual, the largest gains were made in the fine wool categories, however, the 65% of Australian farmers who produce coarse wools also enjoyed significant rises.

Meanwhile, if a week is a long time in politics, then six months must be an eternity.

Former Victorian Premier, Mr Jeff Kennett – who surprisingly lost government in October last year when country voters rejected him on mass – is the favored candidate to chair the Federal Governments new farmer-funded A$2.5 billion research and marketing body.

Mr Kennett has received widespread support from a number of major wool groups to head the privatised Australian Wool Services, which replaces the ill-fated Woolmark and begins operation in January.

His expected appointment is likely to cause some anger in regional Victoria where his two-term Liberal-National Party government has been blamed for a decline in rural services.

Last month, Australias wool producers took part in a national ballot where they voted to halve their contribution to research, development and marketing from a 4% levy on wool earnings to a 2% levy.

The International Wool Textile Organisation (IWTO) will now consider taking over industry promotion and marketing of wool following the decision by Australian farmers.

According to the Stock and Land, the IWTO, which represents the international wool processing, manufacturing and retail industry, has long argued that maximum funding is essential to generate strong retail demand for wool, and has considered establishing its own Promotion Funding Levy to boost industry promotion activities.

According to the newspaper, a meeting of the IWTO executive committee in Brussels earlier this month expressed its view that the industry had been thrown into disarray by the vote, and raised the prospect of asking members to consider supporting the establishment of a wool marketing vehicle, without the financial support of the Australian Government or woolgrowers.

The IWTO is expected to present a business-style proposal for delegates to consider at the IWTOs 69th Congress in Christchurch, New Zealand, next month.

Upcoming webinar

What does the future of farming look like post Covid-19 and Brexit?

Register now
See more