Industry News

What happened to the wool market? How long will this turmoil continue?

2018 ~ 2019 is a rare year of turbulence in the wool market. In the past year, affected by factors such as aggravating drought in major wool-producing regions such as Australia, outbreaks of foot-and-mouth disease in South Africa, and Sino-US trade frictions, wool prices fluctuated like roller coasters. The Woolen can't help asking: what's wrong with the market? How long will this turmoil continue?

Facing difficulties in major production areas

In 2018/2019, the export volume of the five major wool-producing countries decreased by 13% from the previous year, only 541,000 tons, a new low for many years. The weakening demand for wool raw materials is evident from the decline in exports from major wool producing countries.

According to Australian Merchant Development Company (AWI) Wal Merriman, the supply of wool depends on three aspects, one is the weather, the second is the market price fluctuations, and the third is the inventory situation. "The current drought has severely affected the normal supply of wool. This time the drought is long and severe, so as a herder, a lot of money is needed to cope with the drought. In addition, the high price of mutton and the fast access to money will certainly be linked to Merino Sheep are competing for limited resources and conditions. At present, Australian wool production is the lowest in 90 years and has fallen below 300,000 tons. AWI believes that it will take 5 to 6 years to rebound. Due to wool prices in recent weeks The sharp fluctuations in the price have greatly affected the wool industry chain, especially the supply of raw materials, so the supply of fiber will take some time to recover. At present, Australia ’s labor costs are relatively high, and increasing the degree of automation in sheep farming may be A solution, but it needs a process. The cost of sheep raising + labor costs + uncertain weather factors requires herders to calm down and calculate carefully, which aspect of agricultural activities can continue to survive.

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