Challenge on robotic shearing

Mr Macdonald told the conference that working with live animals offers a wider challenge for innovation and progress, although there are no examples of robotic use with animals on farms.

“I then through down the challenge to them — with their advancements in robotics (manufacturing), which are truly impressive in China — to automate shearing and help us solve those issues, which I think was taken well.”

Mr Macdonald said the Chine trade is also getting “pushback” from the other end of the supply chain, with no change in economic conditions in consumer markets.

“The only thing that has pushed the price up is lack of wool and really that was the main message that we wanted to say is, ‘if you are worried about lack of wool now, don’t let this market fall, because if this market goes back to 1400-1500c/kg (clean) again you’re going to lose a heap more’.”

Chinese top makers ‘caught in a wedge’

Mr Macdonald said China’s top makers are “caught in a wedge” being no longer able to blend higher priced wool with cheap stock on hand.

“Now that’s all gone, they’ve got no cheap stock, everything they’re buying is costing them … they’re apparently not able to sell tops for no more than what they are paying for the wool, in other words they are processing it for nothing.”

To counter this there is a trend toward blending wool with other technical fibres, including for next-to-skin wear.

“So we are now getting 40-50 percent of wool into a sector where we had nothing, so that’s all positive.

“Europe is looking a bit better, but basically consumption at the other end is probably stagnant and if we hold production where it is at, we’ll certainly I think keep the market somewhere in the ballpark of where we are,” he said.

“The question I asked everywhere we went, when they asked about increasing production, is ‘If we add 10-15pc to the wool clip that puts up over 300 million kilograms, will the price stay where it is?’… and they couldn’t answer it.

“They didn’t give me confidence they they could handle 340 million kgs at a viable price, where we were 10 years ago,” he said.

No wool in the pipeline

Mr Macdonald said there is no wool in the global pipeline.

“You can see for yourself that the mills are not running at capacity and they’ve got no stock.”

But he said the spinners are saying that their trade is better than it was 12 months ago.

“So there is a little bit of confidence there and I think that once we get the peak spring season shearing behind us and they see that we fall back to 25,000 bales a week (in auctions) as far out as you can see, they will have to step up to the plate, but it is not because they’re making sales at profitable levels to the spinners, it’s because they want to keep their machinery running.”

Mr Macdonald said one thing that put “a spring in his step” was the calibre of the young wool growers that are better tuned in than their predecessors at the same age.

There is as much interest from Australian wool growers to see how committed the Chinese industry is as there is from the China trade in assessing the level of commitment from Australia, he said.

Mr Macdonald said the wool industry is really exposed to the generational switch to new enterprises.

“We are exposed to a new cohort of young producers coming on that are taking their parents’ debt and buying new country, and if the numbers don’t stack up and they can’t get the work done, they will do something else as quick as that.”

Positive tone at conference – Lamb

Australian Council of Wool Exporters and Processors president Josh Lamb said the general tone of the conference was positive, with a lot of discussion about current wool prices and the ability of the trade to pass it on down the pipeline.

“The general consensus is that only 60-70 percent of the rise of the last 12 months is being passed on by early stage processors.

“The take away from that is a large part of it is being consumed and given how quickly the market rose, that’s encouraging,” he said.

“It can take 18 months or more for any significant market move to be accepted all the way to the retailer or end user, so to see almost three quarters of the rise being accepted bodes well medium term for the market here.”

Mr Lamb said having almost 80-100 wool growers present gave the conference a different feel this year.

“There was a real sense of collaboration from the Chinese and Australian sides for a more sustainable price and industry.

“Quite a few Chinese clients made mention to me of how young the grower attendees were, not just the Australian Wool Innovation future leaders group, but all three Broker lead tours also,” he said.

“The global industry thought this was very noteworthy as well.

“With several wool growers speaking at the conference, China now has a better understanding of the challenges Australian growers face daily,” Mr Lamb said.

“The most important of which is they don’t have to grow Merino wool. It’s a choice not a given.”

Mr Lamb said the Chinese industry is narrowing, but as it does the investment is increasing.

“Growers saw this first hand and took confidence in that intent for Chinese processors investing in the future of our great industry. It’s here to stay.”

Source: Sheep Central (Author: Terry Sim)