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Monday, June 13, 2016

Rainfall impact on wool production

By Andrew Woods  |  Source: BOM, AWEX, ICS

Key points

  • Seasonal conditions are improving in the driest areas in Victoria and surrounding regions.
  • Wool production in terms of volume will continue to reflect the dry conditions of the past year well into the spring.
  • With the break of season in many regions a break in the staple will occur so expect staple strength to decline between now and the Christmas recess and the mid-break to increase.

2016-06-13 Rainfall Fig 1

2016-06-13 Rainfall Fig 2

Rainfall has given a promising start to pastures (and crops) in many regions in recent months. This article takes a quick look at recent rainfall across the different regions as well as a look at the running 12 month rainfall ranks for the same regions and its impact on wool production.

In early May ‘Rainfall around the regions’ Mecardo reviewed rainfall for the past 12 months across the different regions and then looked at the potential improvement in rainfall in the coming year given median rainfall levels. Basically Victoria and its surrounding regions had (and still do) the best potential for an improvement in seasonal conditions resulting from increased rainfall.

Figure 1 shows the regional rainfall rank for the past three months. The Midlands in Western Australia has had the best rainfall followed by northern South Australia. The Victorian regions have had rainfall in the 40th to 60th percentile, which is a vast improvement on the past couple of years. Queensland, northern NSW and south east NSW were dragging the chain as of May, however the strong system that has moved down the east coast during the past week will have lifted rainfall for south east NSW especially. From the perspective of recent months rainfall, the potential for improvement mentioned in the early May article is on track to materialise (subject as always to spring rainfall).

Wool production reflects the past rather than potential seasonal conditions in the coming year. With this in mind Figure 2 shows the 12 month rainfall ranks as of May for the past three years by region, with a weighted Australian rank shown on the far right. The big dip in the middle regions for 2015 and 2016 reflects the dry times that Victoria, southern South Australia and Tasmania have endured. Sheep numbers and clean fleece weights from these worst affected regions are lower, which is being reflected in the lower AWTA volumes. While Figure 1 is promising it will take a full season for clean fleece weights to recover and a couple of good seasons for sheep numbers to rebuild.

What does this mean?

Wool production reflects seasonal conditions during the time it is on the sheep’s back. For the time being wool production will continue to reflect the dry conditions of the past year (the overall Australian rainfall rank weighted across all regions was 38% to May) in terms of low fleece weights and lower numbers therefore limited volumes. This will help support prices generally.

The advent of the winter/spring season also means that the staple strength will decline between now and Christmas as the mid-break level rises. Price discounts for these two wool attributes will start to rise as their supply increases.

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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