Wool Market Reports - Archives
There has been only moderate improvement in the wool market in 2013 compared to the very difficult trading conditions that prevailed throughout most of 2012, none the less this is good news and hopefully the market has turned the corner. World wool prices slipped throughout 2012 because of continuing poor demand within the textile industry, a direct result of difficult economic and retail conditions around the globe. Although economic conditions in the major wool consuming countries continues to present challenges for the wool industry, there are signs of improvement beginning to emerge. Particularly in the USA, Japan, the UK and the Euro zone but growth in retail sales still remains relatively weak.
Economic growth continues to be the key driver for improving raw wool demand and confidence in the market place, with the end result being increased purchasing of consumer goods. Wool prices are also influenced by wool supply and historically low global wool supplies and production could be helpful in lifting wool prices at some stage when real demand increases. The forecast is that global wool production in the coming year is not expected to increase and may actually decrease slightly.
Although growth in China slowed to 7.5% in 2013, it remains a major global market for wool with over 50% of the New Zealand wool clip and upwards of 75% of the Australian wool clip exported to China. The situation is much the same for most other wool exporting countries. Significant change is taking place in China as it transitions from a low cost exporting nation into the world’s largest affluent domestic economy. In addition to rapidly rising Chinese labour costs, the Chinese government is pushing industry reform with the main focus on restructuring and upgrading existing facilities, introducing new technologies, reducing overcapacity and improving environmental performance with energy conservation and reduction of emissions.
To assist in offsetting some of the associated costs of reform the Chinese government is supporting textile exports by reducing costs for a number of measures, including customs clearance, tax reduction and financial support. Their austerity program has resulted in the delay of some government contracts such as uniforms etc but it is expected that after evaluation these will be tendered in the near future and will give a boost to the Chinese textile industry.
The outlook going forward is cautiously optimistic for wool trading and demand over the next 12 months with current sentiment definitely being more positive than a year ago. According to Dr Paul Swan of AWI, a key opportunity to improve the demand and price for wool in a competitive market will be the new emerging economies of Asia, Brazil and Russia where sales of premium goods will increase considerably as 320 million consumers move from lower economic income to middle and high income levels.
Domestic Wool Market
We are in a well sold position for the 2013 Canadian wool clip and our main buyers continue to be China and USA. For marketing the Canadian wool clip, we will continue our practice of a carefully calculated and disciplined wool marketing approach. This will consist of a combination of forward contracts and spot sales at opportune times throughout the year, of our fully graded and objectively measured wools, to our established wool markets. As well, we will manage our foreign exchange risk with a hedging strategy that utilizes option dated currency contracts. In order to better serve our producers we have continued to expand our network of wool collection depots across the country and this initiative will be continued where it is practical. Wool handling equipment is also being updated on an ongoing basis to improve efficiencies.
Briefly highlighted, some 2013 CCWG activities are as follows.
- Participated at the 25th International Wool Trade Fair and Information Conference which was held in Suzhou, China Sept 14th – 16th, 2013. Canadian wool was on display at the trade fair and we successfully negotiated a number of contracts for delivery through to February 2014. The event was attended by 500 delegates from the Chinese and International wool trade. It was very informative and a great venue to promote Canadian wool to a wide range of potential buyers. Traveled before and after the conference with CCWG agents in China to promote and market, graded and objectively measured Canadian wool.
- For the fiscal year ending February 28, 2013 the co-operative recorded gross sales of $8,688,513 which represents an 8% increase from the previous year. Sales have increased almost 28% over the past three years. The Board of Directors authorized a dividend payment of 7% to the shareholders of record date December 31, 2012 and 5 cents per pound to the Shareholder Wool Shipper Loyalty Reward Program (SWSLRP). Full details on these programs can be found on the company website www.wool.ca. Wool volume increased by 8.2% in 2011 and 8.6% in 2012 but slipped by 6.5% in 2013, due mainly to a reduction in wool consignments from Quebec.
- The CCWG Board of Directors approved managements proposal to renovate the Carleton Place Stockman Supply Store.
- The project involves demolishing and renovating the existing Stockman Supply Store which is contained within the warehouse and is comprised of an area of approximately 7,500 square feet. The original stone walls of our CPR roundhouse will be sandblasted to highlight the beautiful architecture of the building which was built in the 1800’s. As well, fifteen large heritage style windows will be installed.
- The current store and inventory has been relocated into our new warehouse building until the project is completed (estimated 10 – 12 weeks). During this time frame the new storage building will not be used for storage of graded wool bales.
- The design-build contractor for the project will be Cornerstone Builders Ltd from Belleville, ON. (see www.wool.ca/Renovation for a slide show of the renovation in progress)
- An older model wool baler at the Carleton Place wool grading facility has recently been replaced with a new high density wool press that was purchased from a USA manufacturer.
- Major sponsor for numerous sheep related events during the year across the country.
- Working closely with ear tag manufacturers, the CSF and provincial sheep organizations in support of the CSIP. Renewed contracts and distribution agreements for the upcoming year.
- CCWG websites, www.wool.ca, www.premier-choix.ca have been upgraded along with new user friendly e-commerce in English and French.
- CCWG promotional materials have been updated and a new French Livestock Supplies Catalogue is now available from Premier Choix Agricole.
- Helped organize and supported shearing schools in western and eastern Canada in 2013.
- New staff appointments have been made at CCWG branches in Lethbridge, AB, Saint-Hyacinthe, QC and Carleton Place, ON.
- Sponsored a research project undertaken by Dalhousie University to investigate the feasibility of wool value chain development.
Our retail business continues to grow and is a very important source of revenue for the company. It enables us to present a strong balance sheet for operating the business and for financing future expansion, capital expenditures, as well as our ongoing support and commitment as a sheep industry partner
Appreciation is extended to all CCWG staff and Directors for the successful results that have been achieved during the past fiscal year. We also thank our loyal customers for their continued support and patronage.
Eric Bjergso, CCWG General Manager attended the 25th China International Wool Trade Fair
and Information Conference which was recently held in Suzhou, China from September 14th – 16th 2013.
Canadian wool was on display at the trade fair and we successfully negotiated a number of
contracts for delivery through to February 2014.
Eric Bjergso, CCWG General Manager addresses the conference delegation
with an update on the Canadian sheep and wool industry.
Eric Bjergso, CCWG General Manager examines Canadian wool with visitors
from Uruguay, D’Jalma Puppo and Margarita Cortabarría of Estancia Puppo SA.