Wool growers have long told those along the supply chain to start paying more for finer micron wools, or one day there won’t be any producers left. Now the wind is shifting in the producers’ favour and those in true fine wool country might be about to recapture long awaited returns. The big price increases of last week, consolidated at this week’s sales, show just how fine a line buyers have been walking between demand and supply. Demand hasn’t exactly gone bonkers, but the increase in orders has been enough to uncover to buyers just how little surplus quality wool at the finer end of the market is out there.
A number of factors now play in the favour of true fine wool producers. The rises in 2011 and 2015 were more sudden and this time there is no drought-fine wool. Also, the large number of producers who exited fine wool production for other enterprises, be it broader wools, lambs, or even beef – and given the strength of those markets – means the growers that once might have jumped back into finer microns are no longer there.
For quite some time, talk of hand-to-mouth buying and an empty “pipeline” frustratingly hasn’t amounted to much. The market needed a catalyst, which has emerged in increased demand from the fashion world. How long that demand lasts will be fickle, but while it does, the strong prices in the commodities the fine wool industry lost so many producers to will now help hold growers back from re-entering the fine wool space.
The strength in the medium and broader microns, plus the price of beef and lamb, mean there’s no advantage to go back to fine wool, leaving the domain of the finer microns to the few who have stuck it out. This will ultimately help supply remain at a level where there’s just enough to slake demand, while avoiding the onset of a glut.
After all, if a producer is cutting as much as double the wool from a 21-micron ewe as a 17-micron ewe, while also producing a heavier lamb and a higher value ewe, the value of the larger ewe will outweigh any gains that might be made by a switch back to fine wool.
This might therefore buy some time for genuine fine wool growers to capitilise on better returns from country not suited to other enterprises. And, due to the continued strength of other commodities, the rise will do little at this stage to change the dynamics in the fight for acres that fine wool has lost so much ground to in recent years.
