For some time, we have been writing about our concerns for the Merino Wool industry, noting the “fight for acres” to date has been well and truly won by the croppers. To top it off, the number of ewes now mated to terminal sires has also been growing. It hurts an old shearer/wool classer/wool broker/wool market watcher to see properties that for over a hundred years proudly produced Merino wool, jump ship and either rip out the fences and plant crops, or purchase terminal rams and get into prime lamb production.
Topics: Wool industry
For some time, there have been messages from wool processors that much of the Australian wool clip is too long. If this is true then shorter lots should attract a premium – this would be a normal economic lever to attract more of the type, and if that is the case can wool producers justify the additional cost of two shearings in one year?
To get to the bottom of this issue, a full understanding of the situation is needed. It is normal for suppliers (wool growers) to want to meet customer requirements (processors). At the same time, meeting the “new” requirement cannot increase the net costs to the business unless there is an off-setting increase in income.
The wool industry relies on the shearer as the first stage in the harvesting and movement of wool to its ultimate market. And while this process has been successfully carried out since sheep first arrived in Australia, it is curious that this harvesting system has progressed little over time. The timeline for the evolution of shearing is slow, interrupted with disputes and false starts.
In this blog we look at one innovation with the potential to take wool harvesting to the next evolutionary level.
There are times when you just have to stand up; “it’s now or never”. Coaches espouse the need to win the crucial 3rd quarter, the “break” point in a tennis game, or bowl the “dot” ball at a crucial time of a cricket match. “Sometimes there is no next time, no time-outs, no second chances. Sometimes it’s now or never." The playwright Alan Bennet probably wasn’t talking about the wool industry, but he could have been.
Prices are great but the industry is in decline, how do we learn from other industries to save Merino in Australia. How do we make merino great again?
This blog article takes a look at managing downside price risk exposure for a wool grower using forward contracts and minimum price contracts.
There are two predominant strategies to reduce the effect of price volatility when selling physical wool for a date in the future. These are by using a forward contract or using a minimum price contract (MPC).
The purpose of this blog is to explain more about using “one cancels other” or OCO orders on the Riemann wool forward market with a particular focus on the 19 and 21-micron contracts. As part of the blog we will also undertake analysis of the basis between 19 and 21-micron classes to outline the seasonal movement in this basis, including how/why the basis has narrowed over time.
The egg industry is a good example in how to deal with Animal Activists, and perhaps it can provide some ideas for the Australian wool industry around how to respond to the mulesing debate.
The production of cage eggs and the subject of mulesing have been easy targets for the radical activists, however the end result to each industry is starkly different.
When producers are asked, both industries are adamant that their practices (cages and mulesing) are not only humane, but actually improve the welfare of the bird/sheep.
I have been analysing the world wool market for well over 20 years, looking at the medium and long term trends and prospects. Over that time wool’s share of world consumption of textile fibres has fallen from 4.3% to 1.2% now.
When I make presentations on the global trends and prospects, particularly when I present to wool producers, inevitably the decline in wool’s volume share of the world textile market is raised. Clearly this decline is bad, isn’t it? And shouldn’t something must be done to arrest and reverse the decline.
My answer to both questions is: No. Volume share is a red herring.
Topics: Wool industry
In his iconic 1975 song “Slip sliding away”, Paul Simon most certainly wasn’t talking about the merino sheep industry. However, the lyrics could easily relate to the direction that flock numbers and wool production has taken, especially since the 1990s.
In fact, this trend isn’t confined to Australia: the number of sheep worldwide have also fallen over this period.
Usually, the cause of such a decline would be readily understood: low prices, diminished demand, or a combination of the two are the usual culprits.