THE extraordinary superfine wool market gains experienced in the past year stands in stark contrast to the price dive experienced by broad wools.
This dramatic tale of two markets has been revealed by the world’s leading commentator of the global wool market, Chris Wilcox, chief executive of National Council of Wool Selling Brokers of Australia, during the International Wool Textile Organisation’s (IWTO) 2017 Congress currently on in Harrogate, United Kingdom.
“The current market is unusual – it has caught those who work… in the business by surprise,” Mr Wilcox said.
“The New Zealanders and Uruguayans (broad wool market) are very concerned and surprised by the severity of the drop in prices and demand.
“On the other hand, people are surprised how well merino prices for fine and superfine are doing and how strong demand is.”
In contrast to the rising trend for finer wool from Australia and South Africa, Mr Wilcox said demand for broader wool had waned in the past year.
Fine wool prices in Australia and South Africa have enjoyed record-breaking rises over the past two years, with Australia’s 18 micron range accelerating 45 per cent on year ago levels.
At the same time both crossbred wool, indicated by New Zealand prices, and for broad carpet wool types reflected by the trends in UK prices, have taken a dive since mid-2015 - falling by 30 to 40pc in the past year.
Global wool production has modestly increased from 70 year lows to an expected 1.161 million tonnes clean in 2017, according to Mr Wilcox, due to sheepmeat prices spurring a modest recovery of sheep numbers globally.
“As a result, we are seeing an increase in broader wool used of interior textiles – the gap in volume between production of interior textile wool and of apparel wool has been widening,” he said.
A combination of price appears and seasonal conditions appears to have influenced production with Australia leading the charge with the most dramatic gains for apparel wool countries of 6.4pc to 276900t clean, while New Zealand has experienced the largest fall among interior textile wool countries at 5.1pc to 103100t clean.
The forecast for next year was the world would produce slightly less wool, and of that more will go to interior textiles.
Mr Wilcox said there was a growing divergence between interior textiles and apparel, with the use of wool for textiles overtaking apparel in 2008 and the gap had continued to widen.
While the demand for apparel wool was on the rise, since 2013 the difference between apparel was nearly 50m kilograms clean more annually.
The environment was positive from early stage processing to knitting businesses, while interior textile industry was pessimistic.
“One factor has been supply of apparel wool, particularly Merino wool, has been so constrained,” he said.
“Even though retail sales haven’t been all that strong, anecdotal reports suggest Merino, next-to-skin products have been doing pretty well.
“Whereas for the broader wools, the interior textile types, retail sales for carpets and rugs have been quite soft. As well, in China which use broader wools for heavier weight outer coats, there has been significant substitution of wool with acrylic and that has borne down on demand for broader wool.”