Audio – Wool price surges as Chinese processors desperately search for stock

4 June 2015
Will Ockenden
ABC News

The wool market has been rising slowly for a month or so now, and over the last week it has dramatically kicked into gear. The wool price is surging on the back of exporters reporting shortages of stock in the Chinese mills, and growing demand for wool products like knitwear.

MICHAEL BRISSENDEN: When you talk to a wool grower about how the market is going, you usually hear a lot about the low price of wool.

But the wool market has been rising slowly for a month or so now and over the last week it has dramatically kicked into gear.

As Will Ockenden reports, wool growers have a smile on their face for the first time in years.

AUCTIONEER: 1226, 1226 …

WILL OCKENDEN: In a small room accessed by walking down a few corridors which haven’t been updated since the 1970s you’ll find about 13 people yelling out numbers.

AUCTIONEER: 137 out 10.50, 10.50, 40,000…

WILL OCKENDEN: This is the room where most of the wool from New South Wales and Queensland is sold.

Over the last month and a half the wool price has been increasing but over the last week it has, in the words of one wool broker, “gone ballistic”.

SCOTT CARMODY: Absolutely good for the growers and a long time coming, I’d suggest all are saying. So no, it’s good.

WILL OCKENDEN: The wool price is as good as it’s been for more than four years and the pass-in rate is at the lowest level since records began more than a decade ago.

Scott Carmody is a wool buyer for a trading company which sells to Chinese mills.

SCOTT CARMODY: People don’t pay this because they have to; it’s because of demand. So obviously there’s demand built up at the end of the chain. Obviously the garment manufacturers are selling and that flows back through.

WILL OCKENDEN: For wool growers the recent surge in prices has put a rare smile on their faces.

Michael Reid is from Stuart Town in central New South Wales. He’s made the trip to Sydney to watch the wool from some of his 4,000 strong flock be sold.

MICHAEL REID: Oh look, at the minute you’d be pretty hard-pressed to whinge. Wool’s not too bad. Cattle prices are best they’ve been for a long while. Your meat markets are fairly good. Got low interest rates. Just need a bit of a hand with the season and all should be pretty sweet.

WILL OCKENDEN: Last week during the Melbourne auction, the wool price surged in the final hour of trading.

That surge continued this week as buyers had to compete with each other for a smaller amount of wool to fill the orders of the Chinese mills.

John Evans works for Tianyu Wool, one of the world’s largest wool processors.

JOHN EVANS: They’ve all been waiting for the price to get cheaper and it hasn’t got cheaper so their stock levels are at record lows. So basically, it’s got a bit of push and take, they’ve got to buy sooner or later.

WILL OCKENDEN: Around 80 per cent of Australia’s wool ends up in China so when many of the Chinese factories need product, the price is only going one way.

JOHN EVANS: Really none of them have too much stock at all at this moment. Tianyu has a reasonable amount of stock so they’re on the good side of it all but a lot of the small trading mills you could say have low stock levels at the moment.

WILL OCKENDEN: As for if the high prices will last, wool growers like Michael Reid learnt a long time ago not to try and predict the future.

MICHAEL REID: Most farmers and wool growers are optimists so we’d like to think that it would stay there for a period but, yeah, it’s an open market so who knows.

MICHAEL BRISSENDEN: I think that’s you call a good yarn. Wool grower Michael Reid ending Will Ockenden’s report.

Listen to the audio here.

Courtesy of ABC News

Become The Voice of The North

Voice of the North

Be Heard