Brought to you by AG Concepts

Tuesday, August 11, 2015

Australian wool exports ride higher on the dragon’s back

By Chris Wilcox, Poimena Analysis  |  Source: Australian Bureau of Statistics, Australian Council of Wool Exporters and Processors

Key points

  • Australian wool exports surged in the first six months of 2015
  • This was due to record purchases by China
  • Exports to other countries lifted as well
  • The higher wool prices in recent months is a result of the strong increase in raw wool demand


2015-08-11 Aussie Wool Exports FIG 1

2015-08-11 Aussie Wool Exports FIG 2

Australian wool exports surged in the first six months of 2015 because of a strong recovery in raw wool demand from China. This, however, masks the continued solid demand from a number of other countries during the 2014/15 season.

After being below year earlier levels for most of 2014, Australia’s wool exports have been on a cyclical upturn throughout the first half of 2015 (see figure 1). In the January to June period, Australia’s wool exports were 191 mkg greasy weight (19% higher year-on-year), worth $1.50 billion (31% higher). The total exports this year to June were the highest in both value and volume terms since 2011.

The strong recovery in wool exports so far in 2015 is directly linked to an enormous lift in exports to China. These were 26% higher by volume and 41% higher by value, totalling 146.8 mkg greasy worth $1.14 billion. This a record value of exports to China for the first six months of the year and the second highest ever volume of exports (only slightly below the levels in January-June 2009 when wool prices were substantially lower than now).

While the increase in Australian wool exports is largely caused by China’s increased demand, this has been supported by a solid level of demand from other destinations. In aggregate, export volumes to the other destinations were 1% higher than for the first six months of 2014, while the value of Australia’s exports to these countries were 8% higher. As a result, exports to these other destinations in the first six months of 2015 were at the highest level since 2011 in both volume and value terms.

As figure 2 shows, China accounted for 75% of Australia’s wool export volumes (on a greasy weight basis) for the 2014/15 season, followed by India, the Czech Republic, Italy and South Korea. This is a higher share than the 73% that China held in 2013/14 but lower than the 77% record level in 2012/13.

What does this mean?

The very strong lift in wool exports China is very welcome. It has come as the result of much lower raw wool purchases by China in 2014 as it ran down excess stocks in its wool textile pipeline. Of equally good news is the solid increase in exports to other destinations for Australia’s wool. Given that exports to China were at or near record levels for the first six months of a calendar year, the question is whether China’s wool textile industry can maintain its demand in the next few months as the new season’s wool clip comes onto the market. While there are no signs yet of a weakening in China’s demand, a concern is that stocks within China’s industry could be building up.

Northern MPG
Northern MPG

Want to see more ?

Go to Wool data

Southern MPG
Southern MPG

Want to see more ?

Go to Wool data

Western MPG
Western MPG

Want to see more ?

Go to Wool data

Mecardo information is provided to assist in your marketing decisions. It contains a range of data and views on the current market. It is not intended to constitute advice for a specific purpose. Before taking any action in relation to information contained within this report, you should seek advice from a qualified professional. The information is obtained from a variety of sources and neither Mecardo nor Ag Concepts Advisory will be held liable for any loss or damage whatsoever that may arise from the use of information or for any error or mis-statement contained in this report. 

x

Sign up for a FREE BASIC SUBSCRIPTION now to read this article.

Mecardo will send you its latest market analysis outlook delivered to your Inbox as it's published.  You will also receive one month Premium access for free.

You tell us what information you want to hear about, so you'll only be alerted to information that is relevant to you.

Learn more about Mecardo Sign Up Now!