Brought to you by AG Concepts

Thursday, September 19, 2013

How do lamb skins relate to wool prices?

By Andrew Woods  |  Source: MLA, ABS

Key points

  • Lamb skin prices have followed similar cycles and trends to combing merino prices since the middle of the last decade.
  • Lamb skin prices have a much weaker connection to crossbred lambs wool prices.
  • Given the expectation of strong wool prices through to next autumn it seems likely lamb skin prices will be strong also, after allowing for seasonal price patterns.


2013-09-19 How Do Lamb Skins Relate To Wool Prices FIG 1

2013-09-19 How Do Lamb Skins Relate To Wool Prices FIG 2

During the past seven to eight years, lamb skin prices have followed similar patterns to combing merino wool prices. During this time changes in the 19 MPG price level has accounted for around 70% of changes in lambs skin price levels, which is something of a surprise.

Figure 1 shows a price series for lamb skin 20-24 kg with 25-50 mm wool and the 19 MPG from 2002 onwards. Apart from 2004 and 2005, the two series have a strongly positive correlation. Since 2006, the correlation has been consistently strongly positive.

The logical wool category to compare lamb skin prices with is one of the crossbred lamb categories. In Figure 2 the same lamb skin price series is shown along with the monthly average price for 60 mm long 26 micron crossbred lambs fleece. The connection between these two series waxes and wanes, which means it is inconsistent. It is nowhere as strong as the connection between the skins and 19 MPG prices.

The implication of this connection to combing wool prices is that lamb skins (and sheep skins) are connected directly to the apparel fibre markets through their link to wool. The strength of wool prices will be a good indicator of the strength of skin prices.

What does this mean?

Lamb skin prices look to be connected closely to the apparel fibre markets. The strongly positive correlation between lamb skin and merino combing prices since 2006 indicates that the strongly positive outlook for wool prices through to next Easter should see solid to strong lambs skin prices also.

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!