NEW YORK — The price of wool in Australia is on the rise, and that comes as very good news to growers there.
In addition, the emergence of wool in several apparel segments, along with a blossoming U.S. market, is lifting the spirits of an Australian wool industry that has been suffering over the last two years. Australia produces nearly 63 percent of all raw wool for apparel worldwide.
However, the country’s exuberance is being tempered by prices that are still below the point where growers can make money and reinvest in their farms. Furthermore, Japan and Europe, two key markets, are still in the throes of recession.
Despite all that, things are improving. The most recent sign came just this month, when the price of raw wool climbed over 500 cents Australian ($3.56) per kilo for the first time since November, reaching a high of some 550 cents. Before that, the market had been under 500 since the first week of February 1993.
The price on Feb. 18 was 523 cents.
Still, according to Danny Neff, the International Wool Secretariat’s director for North and South America, for growers to prosper, the prices must hit 650 cents.
Neff said that’s the point where growers “begin putting some money into their stations and farms, to keep up efficiencies.”
“I’m already making contingency plans to go into the asphalt business with my brother if I have another bad year,” said John MacGruder, a grower with a herd of about 2,000 sheep, in a telephone interview from his farm outside Melbourne. “It’s getting frustrating, and we all know the situation as it exists around the world, and it isn’t pleasant. If the market isn’t there, it doesn’t take a genius to figure that you have to find another line of work, especially the smaller growers like me.”
MacGruder was one of several growers cited by the IWS to confirm the hard times they are facing.
Looking to help the situation, the Australian Wool Exchange took control of the auctions, beginning with the sales in Melbourne on Feb. 1, and in Gouldbourn, New South Wales, the following day. The wool was sold in free-market auctions held under government auspices.
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Brokers or merchants now wishing to sell wool — and exporters and processors who want to buy — must be Exchange members.
Compulsory membership provisions have been accepted by the larger brokers and exporters, and by their respective associations, such as the National Council of Wool Selling Brokers and the Australian Council of Wool Exporters (ACWE), the Exchange said.
The change has caused a reduction in the amount of wool offered and is cited as a major factor in higher prices.
According to ACWE figures, during the week when prices hit 550 cents, only 82,000 bales were offered. Usually, the figure is 90,000 to 95,000.
“With the system that is now in place in Australia, I believe the future is much clearer for the wool merchants,” said Neff. “In addition, from a fashion standpoint, things are starting to pick up.”
Among the bright spots for wool are the moderate-priced sportswear and high-end fashion markets, and some segments of knitwear and coats. The export market to the U.S. is growing, primarily through worsteds and blends.
“We are encouraged that wool is showing signs of becoming more important in the mainstream, moderate areas,” said Brigitte Rongier, director of the IWS’s Paris office. “Although nothing is doing spectacularly well in Europe right now, and there are still inventory surpluses with retailers and manufacturers, getting wool into more areas will help.” Stura, a Vaiano, Italy-based mill that has historically catered to the better markets with 100 percent wool fabrics, is now offering wool blends with polyester and rayon, aiming to hit the moderately priced areas, said Paul Missinkoff, the company’s general agent.
“The U.S., believe it or not, represents one of our best opportunities,” said Missinkoff. “That’s why we are frantically trying to grow our export business. The business is such that pockets of sportswear and careerwear are getting into wool, but at lighter weights. That means blending.
“Europe, however, is horrendous,” he added. “If you sold 10,000 yards to a manufacturer before, you’re lucky if you can get him to take 6,000.”
Tino Briggati, general manager and principal of Carpini, Montemurlo, Italy, a producer of better-price and luxury wools, said his company has been most hurt by the poor German economy. Germany had been Carpini’s biggest export area. Today, Briggati said Carpini is looking at opportunities in the U.S. — through Forstmann & Co., here, which is importing Carpini’s goods as well as domestically manufacturing styles designed in Italy — and is trying to develop bigger markets in France and Italy.
“Wool in the U.S. is fairly healthy right now,” Briggati said. “I think that’s where a lot of the growth is going to be. In addition to Europe, Japan, another key wool user, is having it tough right now.
“With regard to our own Italian market, everyone is trying to get a piece of it,” Briggati added. “It’s just that it is a small pie to carve. France is also a limited marketplace.”