The "Review and Outlook for Mid-Micron Wool 2005" report has been released and is available to Australian woolgrowers. A summary of key points follows.
On the face of it, 2004 had the makings of a very good year for raw mid-micron wool demand and prices, but this was not realised.
Competition from other fibres was a major driver of the result. This competition, particularly from cotton, was intense and was compounded by some wool processors continuing to substitute fine wool (19.5 and finer) for mid-micron wools in response to the low price differential between fine and mid-micron wools for much of the year.
While wool demand faces a less conducive global market place in 2005, mid-micron wool's price competitiveness against other fibres is likely to improve in 2005 and 2006. Continuing high synthetic fibre prices are likely to lead to increased use of mid-micron wool in the price sensitive volume markets such and knitwear and men's wear.
On the supply side, global mid-micron wool production looks set to stabilise after 15 years of declining sheep numbers across most of the major wool exporting nations.
Despite record low mid-micron production, supply and demand is well balanced, with a repeat of the 2002 supply induced run-up in prices unlikely.
In terms of implications for Australian woolgrowers, trends in currency markets will continue to have an impact on on-farm profitability.
