Wagga Wool Co - Wool prices good, but future volatile

WOOLY BUSINESS: Co-owned by Stephen Dill (pictured) and Matthew Ridley, Wagga Wool Co services growers in a radius of about 150km from Wagga.
WOOLY BUSINESS: Co-owned by Stephen Dill (pictured) and Matthew Ridley, Wagga Wool Co services growers in a radius of about 150km from Wagga.

Despite wool prices having a correction over the last six months, growers are still enjoying prices that make sheep a profitable part of farming that outdoes many other sectors.

Combined with the extremely good prices for lamb and mutton, wool is still major factor in farmers receiving good returns.

According to Wagga Wool Co co-owner Stephen Dill, Merino wool prices are still at very good levels and growers are returning around $1800 to $3000 per bale.

"This is still considerably higher than three or four years ago," Stephen said. "Even crossbred wool prices are much higher than usual, with 28-micron wool still selling for 600 to 800 cents greasy."

Despite the good news with prices, Stephen said price volatility could be a major factor over the coming years as buyers, exporters and woollen mills utilise a wool clip that is declining due to lack of rainfall and high meat prices.

"Sheep numbers are still declining at present, so prices look likely to be volatile as the woollen mills are running with little or no stock," he said. "This means when they have to buy wool, the market can jump 50 to 100 cents clean very easily and drop just as quickly when they stop.

"Growers can remove some of volatility by taking out forward prices or basis contracts for some of their clip for up to a year in advance."