THE latest forecast for shorn wool production in Australia in 2011/12, which was released in late December, indicates that production will increase in 2011/12, but by less than previously expected.
The new forecast from the Australian Wool Production Forecasting Committee is for shorn wool production at 350 mkg greasy in 2011/12.
This is an increase of 1.5% compared with 2010/11, the second consecutive year of increases. This is the first time there has been two consecutive annual increases since the late 1980s.
…but by less than expected.
The new forecast is however lower than the Committee’s previous forecast of 355 mkg greasy, which it made in September. The increase is also only modest given the 5% increase in sheep numbers reported by the Australian Bureau of Statistics.
A combination of lower than expected fleece weights and a shift away from sheep for wool towards sheep for meat has meant that the increase is less than previously expected.
Production is expected to increase in Victoria, South Australia and Tasmania, although the projected increase for Tasmania looks too high.
In contrast, production is forecast to fall in Western Australia, Queensland and slightly in New South Wales.
While Australian production is predicted to increase for the second year in a row, production will still be substantially lower than that seen in 2000/01.
Increased superfine and crossbred production...
Production of both superfine wool (18.5 micron and finer) and crossbred wool (24.6 micron and broader) is predicted to increase by around 10% in 2011/12.
The increase in crossbred wool reflects the steady shift towards sheep for meat in recent years.
The increase in superfine wool is a surprise. Before the season began the production of superfine wool was expected to decline a little due to the combination of very good seasonal conditions and the shift to heavier framed sheep for meat.
Production of medium merino wool (21 to 24 micron) is forecast to be steady, while production of fine merino wool (19-20 micron) is expected to fall by 5% in 2011/12.
…which is not being fully reflected in wool export trends.
These trends are not reflected in Australian wool exports for the 2011/12 season to November. For example, in this five month period, exports of 19 micron and finer wool have dropped by 23%. Given the increase in superfine wool production, it suggests that stocks of this wool are building. In contrast, crossbred wool exports are up by 19%.
Production up, but supply down in 2011/12
While production is predicted to increase in 2011/12, the supply of wool (production plus the net change in stocks) will decline. This shortfall will be felt most in the next six months.
There was a significant amount of wool sold from stocks in the March to June 2011 period as wool prices surged.
This sell-off reduced already low stock levels to bare minimums. While there is likely to have been a build-up of superfine wool in the first six months of 2011/12, overall stock levels are still exceptionally low and will not be able to supplement annual production.
As a result, wool supply from Australia could fall by around 5% for the full 2011/12 season.
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