Wool prices have risen to highs not seen in Australia in decades due to growing export demand and limited supply, the Rural Bank says.
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The bank’s 2017 Australian Wool Annual Review said stronger demand from processors and reduced supply saw the Eastern Market Indicator (EMI) rise by 10 per cent to 1507 cents a kilogram in the first half of 2017, while the 17 micron price guide rose 45 per cent over the past 12 months.
It expected wool prices to remain strong in 2017-2018, particularly for fine to medium wool categories, supported by growing export demand and limited, albeit now growing, supply from Australia.
The new report, launched by specialist insights team Ag Answers, also revealed reduced wool exports from major producers such as New Zealand would mean Australian wool growers were well positioned to enjoy the rare conditions of increasing production levels and higher prices.
After almost 20 years of declining shorn wool production, the 2015-2016 financial year appears to have marked the turning point, with shorn wool production expected to reach 341,000 tonnes of greasy wool in 2016-2017, an increase of five per cent compared to the previous year.
Rural Bank agribusiness general manager Andrew Smith said increased wool production was largely driven by the expanding national flock, set to rise by four per cent to 76.6 million head by June 2018.
“All states, except for Tasmania, experienced higher production levels, with favourable seasonal conditions boosting fleece weights for producers in the northern regions and Western Australia.
“Wool growers are very keen to hold sheep – particularly wethers, with some producers experiencing gains in wool production per head due to shearing on a more frequent basis,” Mr Smith said.
On wool exports, the report said they rose eight per cent jump accompanied by a 23 per cent rise in the value – with fine wool exports accounting for 50 per cent of all wool exported.