By Andrew Woods | Source: MLA, ABS
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.
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.
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