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Chinese demand drives spike in Australian wool prices

Xinhua | Updated: 2017-08-01 14:03

MELBOURNE - The price of Australian wool has bounced back after a 20-year lull due to global demand, experts said on Tuesday.

Wool farmers are benefiting from the best prices for their product in two decades with market analysts tipping that the market would remain strong.

Geoff Power, president of Livestock South Australia (SA), said that prices were steady at $12.03 per kilogram for fine wool and medium merino wool and the market was "looking very good."

"There's been new-found wealth in Asia, but particularly in China where most of our wool is processed and then exported," Power told Australian media on Tuesday.

"A lot of our exports, be it mutton, beef or wool, is now staying in China because of a growing middle class with disposable incomes.

"There's a lot of optimism out there for both sheep, wool and cattle as the price of commodities are good."

Australia produced 341,000 tons of wool in the financial year ending in June 2017, 75 percent of which was exported to China.

The price of the wool spiked 10 percent to $12.07 per kilo in the first half of 2017 on the back of strong demand and a limited supply, prompting the ongoing strong market for the commodity.

The shortfall in wool came as a result of low rainfall across Australia stunting wool growth.

The Rural Bank's 2017 Australian Wool Annual Review said that the spike was the end of a 20-year drop-off in wool prices.

Clint Rayner, a second generation farmer, said that the price spike was a welcome boost for his family's farm which is home to 3,100 Merino sheep.

"These are definitely the best prices I've seen since I've became involved in the 80s," he said.

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