Wool shortages world wide have begun to drive prices upwards, on the back of serious production drops from the worlds biggest producer, Australia.
Coupled with this wool supply issue, is shortages in the rival fiber, cotton. Ironically floods in Pakistan as well as Australia are causing supply problems for this product.
And what the best news is, commentators don't believe these issues will be fixed in a hurry, with most agreeing we could have a few years of strong prices before production lifts again.
The challenge for the NZ wool industry is to get its act together during this period, so sustainable prices will maintain production well into the future.
Wool may be in short supply as Australian production falls and European demand improves, according to an industry group in South Africa, the world’s second-largest producer of the fiber for the textile market, said Andre Strydom, general manager at Cape Wools SA in Port Elizabeth, South Africa. A worldwide scarcity of cotton also is stoking demand, he reported in Bloomberg.
The Australian Wool Production Forecasting Committee last month cut its estimate for output in the 2010-11 season, citing “worsening seasonal conditions” in the state of Western Australia that reduced fleece weights. Wool production is sliding in the country because of years of drought and floods that have swamped the state of Queensland, according to Strydom. “It will take about two to four years before we see an appreciable increase in Australia’s wool production,” he said. “Rebuilding stocks in Australia will lead to an increase, but nowhere near the production levels seen a decade ago.”
Australia is the world’s biggest supplier of wool for textiles. The fiber in South Africa sold for the highest price since 2006 at an auction last week, and buyers purchased the highest percentage of bales on offer since November. Prices rose 12 percent to 70.54 rand ($10.17) a kilogram at this year’s first weekly sale on Jan. 12, figures from Cape Wools showed. Lempriere SA and other buyers purchased 98 percent of the 14,189 bales up for sale.
A scarcity of cotton has made wool more competitive with the rival fiber, according to Strydom. Wool is usually five times more expensive, he said. Flooding may reduce cotton exports from Pakistan by 25 percent in the current fiscal year, according to a November estimate from the Karachi Cotton Brokers Association.
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