Wool prices ultra cheap compared to cotton

Wool prices cheap compared to cotton

Sheep & Goats
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Medium wool prices highly competitive against cotton.

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Medium wool prices are highly competitive against cotton as global cotton prices continue to trade near record highs.

And according to the latest market data, medium wool prices have seldom been cheaper when is comes to versing cotton.

Despite global agricultural prices in key markets falling in the last month, such as grains and oilseeds, cotton has remained steady.

Through August 2021 and into September cotton prices have consistently traded over US100 per pound - around a decade high.

National Council Wool Selling Brokers executive director Paul Deane said even with the gains in wool prices last week and the rally of the Aussie dollar in the last fortnight, medium wool prices for buyers in US dollar terms have only been cheaper than cotton 20 per cent of the time in the last decade.

"Physical traded global cotton prices, as measured by the Cotlook A index, have stabilised around decade highs in the last month," Mr Deane said.

"In contract, medium wool prices (21-micron) remain very cheap in US dollar terms - both against historical prices of the last decade and also relative to the dominant natural fibre cotton. "

In fact, he said the contrast is even more stark against cotton and rarely are Australian medium wool prices this cheap against cotton.

"For fine wool (19-micron) the story price is only modestly different relative to current cotton values," he said.

"Fine wool prices from Australia can be described as only being this cheap relative to cotton in one year in 15."

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Mr Deane said there are two factors at play driving high cotton prices.

As major crop prices for grains and oilseeds at or near decade highs, even with recent easing) returns for competing crops to cotton remain very attractive.

"Secondly, is that like wool, global trade is recovering post a weak 2020," he said.

"Global cotton consumption is forecast to be the highest on record in 2021/22. resulting in a further drawdown in global cotton stocks."

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The story Wool prices ultra cheap compared to cotton first appeared on Farm Online.

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