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Tuesday, November 12, 2013

Fibre diameter or fleece weight – what to aim for?

By Andrew Woods  |  Source: AWEX, ICS, Andrew Vizard

Key points

  • Micron premiums are currently very small, ranging from 0% and 6% between 16 and 22 micron.
  • Median whole micron premiums from the past 5 years remain around 10% or higher for 19 micron and finer wool, with perhaps the exception of over length and low tensile wool.
  • Whole micron premiums of 10% warrant reduction of fibre diameter, while holding fleece weights.

2013-11-12 Fibre Diameter Or Fleece Weight FIG 1

Merino micron premiums have been squashed during the past year. This will inevitably lead to questioning of breeding objectives around the balance between fibre diameter and wool cut per head. This article looks at the median premiums of the past 5 years for a range of merino fleece staple length and strength combinations.

Premiums per whole micron (for one full micron) are extraordinarily flat at present. They are in the range of 0% to 6% from 22 micron through to 15.5 micron. However when planning a decade ahead, which is required for breeding decisions, price data used in the planning process needs to be drawn from a longer time period than the past month.

The period used from which to draw data is a subjective choice. A five year period allows a range of market conditions to be incorporated into the data. It is also a good test for fine wool premiums, as the past five years have generally not been a time of large fine wool premiums. (The usual caveat about the future not necessarily continuing past patterns applies).

In figure 1 the whole micron premiums, ranging from 14 through to 22 micron, are shown for merino fleece in eastern Australia with a range of staple length and strength combinations. Stale length runs from 80 mm through to 120 mm, with staple strength falling as the length increases.  The underlying data for figure 1 is shown in figure 2.

How do we make use of this data? Associate Professor Andrew Vizard from Melbourne University proposes that a whole micron premium of 10% warrants a focus on fibre diameter reduction, a premium around 6% warrants equal focus on fibre diameter reduction and fleece weight increase and a small premium or around 3% warrants keeping fibre diameter steady and a full focus on increasing fleece weight.

Using these thresholds as a guide, only the 120 mm long wool with a very low staple strength has a low micron premium below 19 micron that suggests concentrating on fleece weight. The other combinations point to micron reduction as the most profitable focus. The 20 to 22 micron categories are a different story altogether, with very small micron premiums between them.

What does this mean?

There will be a couple of debates about the profitability of reducing fibre diameter in the next few years. One will be about whether to aim for below 15-16 micron and the other will be about simply whether to hold fibre diameter and aim for increased fleece weight.

This article looks at the latter issue, providing 5 year median prices and various premium thresholds for different breeding strategies.

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. 


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