Waiting for wool
“We are in a true supply and demand scenario,” said Kaycee sheep producer Bob Harlan at the Wyoming Livestock Roundup and Double S Feeders 2011 Cattlemen’s Conference.
Harlan looked at the current situation, saying that Australia’s stockpile of wool has been depleted, so the available wool is on the market, and few outside forces are putting pressure on prices.
“Australian auctions are at record levels, and so is the exchange rate,” comments Harlan. “That puts our wool market extremely high.”
Larry Prager of Center of the Nation Wool, Inc. agrees that wool markets are doing well, adding, “Last spring’s production was a record setter in terms of quality and value received. It was a quick and very aggressive marketing season. All of the pieces that we’d like to see in place were there.”
Prager explains that there won’t be a surplus anywhere in the world anytime soon. From supply side economics, the market advantage will go to those with wool to sell next spring.
“We’re in between wool clips right now. We won’t see wool ready for the market until next spring,” says Prager. “The 2011 wool clip is largely already in the marketplace. We’re just waiting for the sheep to catch up so we can shear again.”
Demand for wool will be the unknown factor that producers have to face, says Prager. The relative strength of the American dollar also contributes uncertainty.
“Our prices are established in Australia at the auctions, and when converted to a weak U.S. dollar, more value accumulates on our side of the fence,” says Prager. “It seems unlikely that we will see a strong U.S. dollar anytime soon.”
Harlan agrees, “Wool will remain good with the right exchange rate.”
According to the USDA National Wool Review from Sept. 2, wool was estimated at between $3.57 and $9.03 clean basis, for 30 micron and 18-micron wool, respectively.
Additionally, last week, the Eastern Market Indicator closed up six at 1270 Australian cents per kilogram of clean wool.
Of the opportunity available in the sheep industry, Harlan adds, “I’m supposed to be showing you the opportunities. One bale of wool netted $2,034, and weighing right at five hundred pounds. For ewe lamb wool, we saw $3.43 per pound greasy.”
Harlan also mentioned that pelts were selling at between $25 and $30 per pelt.
“Pelts are higher than ever. Take $25 divided by an 80 pound Wyoming feeder lamb which equals 31.25 cents per pound,” says Harlan. “Wool is great, and pelts are great.”
“We’ve had a great season, and I don’t see any major problems looking forward,” says Prager.
He also notes that the quality of wool will become more important as wool becomes more expensive, raising the bar on producers as far as genetics and management.
“In the tri-state area, we already have sound genetics,” adds Prager. “We have the fineness, and we have flocks that are uniform from year to year and sheep to sheep.”
The tradition of sheep flocks in the tri-state area of raising their own replacements maintains genetics and helps to insure quality, according to Prager.
Prager also sees great color and good fiber strength, as well as low contamination in the Wyoming sheep herds.
“Contamination from black fiber and poly twine is a big part of a potential problem that could exist, but Wyoming has to be on top of the pile on both counts.” says Prager.
In Wyoming, Prager adds that the range environment the sheep are raised on is a key factor is maintaining low contamination.
“We are shearing those sheep pretty much right off the grasslands,” says Prager.
Low risk for contamination combined with our traditional quality always yields high prices in the market when compared to other areas.
“We had a lot of three dollar wool. Never before have wool prices been that high.” says Prager. “We even had a few growers that were over four. This year has truly been a record setter.”
Overall, Prager sees the sheep industry as thriving and a good place to be.
“It’s just a good time to own sheep,” he says. “Lambs are good. Wool is good, and in my time in the industry never before have I seen the economic model for the sheep industry appear any stronger. The sheep industry from any angle is as sound economically as it has ever been.”
Saige Albert is assistant editor of the Wyoming Livestock Roundup and can be reached at firstname.lastname@example.org.