Analyst report confirms refound popularity of Australian wool
20/04/2012
Called Wool — Back In Fashion?, the report is the work of an analyst in the bank’s Sydney office, Airlie Hoskins. In it, she identified renewed optimism among growers and said that while a number of challenges remain, the past year has seen global wool markets perform strongly as “the supply-demand balance has tipped in favour of demand after many years of a supply overhang”.
Ms Hoskins says the “structurally low level of global wool supply” has created conditions for a tighter market, however new demand drivers also appear to be playing a more prominent role in global markets, adding to competition for available supplies.
“Changing dynamics in global wool consumption, historically low wool supplies and wool’s improved price competitiveness relative to cotton and manmade fibres have resulted in above-average levels for wool prices of the past year,” she says. “In 2011, record wool prices have seen many farmers look to rebuild their sheep flocks to capitalise on the improved market returns.”
China remains the key destination for Australian wool exports having substantially increased its purchases over the past two decades, the Rabobank report said. China purchased 73% of Australia’s exportable raw wool in 2010-11, a slight decline year-on-year compared to 2009-10 because of, Ms Airlie said, the return of European buyers to the market.
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