Does crossbred sheep wool have a future? Nothing in Guy Trafford’s crystal ball offers much hope. At the moment it is a matter of limiting the losses

The start of 2020 has not seen any improvement for wool prices. Last year saw a strengthening of the finer end of the market and the 31-34 micron range of crossbred wool obtained some benefit from that getting up to an average of $5.50 back in October.

However, it too has now succumbed to the dilemma of the coarser crossbred wools (35 -40microns) and is now sitting at $3.56 clean.

For the coarser end we have to go back to July 2017 to find similar prices to what the benchmark average is now of $2.76 and a long way away from the $6 being achieved ten years ago.

It is worth remembering these prices are for ‘clean’ wool, that is, the grease etc. stripped out. Having just completed our summer shearing it has brought home to me just how poor the economics of wool is. I can recall my late mother recounting my grandfathers story of selling wool in the depression and after paying for shearers etc. and sending it to the Bradford wool selling centre in the UK receiving six pence (5 cents today) for the privilege. Many growers today (self-included) would be happy to receive the equivalent return today.

 At the moment there is still quite a gap between returns and costs and unfortunately in favour of costs. I don’t think anybody is criticising the shearers and wool handlers for what they receive. They are getting paid well, in my view, but it is a difficult job and there is a lack of young folk joining the industry so if ‘we’ want the job done and retain what shearers we have, then we need to be prepared to pay for it.

The problem with wool economics is the lack of money coming back to the farmer. Sheep farmers generally have had a passion for wool and treasured the status it once had. However it appears the days of wool being able to contribute meaningfully to the farms bottom line is well behind us and now it is a matter of making the most of a poor deal. This means reducing the sorting of wool thereby reducing the numbers of wool handlers required. This will also reduce the satisfaction the wool handlers must get from their job knowing that they are simply ‘shovelling wool’ rather than trying to add value to the commodity.

Timing of shearing is now done to suit the benefit of animal and work management rather than shearing for the sake of harvesting wool at its best time.

Given the technological gains and price benefits made with other wool like products, synthetic and natural, the chances of crossbred wool making a comeback looks highly unlikely. Just lately lambs wool which normally falls into the fine wool status and prices that can at least arouse some interest has now it appears also been infected by wools demise with the benchmark price falling below $5 per kilogram.

The trade war between China and the US while not helping the situation creating uncertainty in China where much of the wool manufacturing takes plus they are running down inventories, is not the fundamental problem. Wool carpets, where most crossbred wools have traditionally ended up seem to be very price sensitive and even at the low prices wool carries, other products can create carpets which are easier to produce and capture most of the benefits wool has, plus more, and all at a cheaper price. Manufacturers seem to have no problem in seeing the industry disappear as the wool price makes up a relatively small margin of the final product price. However, it appears to be enough to warrant buyers see it go.

World production is generally trending down as sheep numbers reduce. The Australian drought is having a marked influence on Merino wool production which is helping keep that market up, but is a minor influence on the crossbred wools.

The question going into the future is, does coarse wool have any sort of a future and if it does what that looks like? It doesn’t appear to be in carpet, at least not in the volumes required to support an industry.

I have heard geneticist say that any sheep can produce any type of wool with a bit of ‘manipulation’ and weather permitting. However, nothing seems to be forth-coming fast enough to arrest the continuing decline. For sheep farmers the redeeming factor is the good prices being achieved by the meat products. It seems somewhat ironic given the negative publicity meat has been getting and the positive story that can be achieved around wool, especially when compared to some of the competing synthetic products.