Wool Market Reports

 

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Wool Market Update Spring 2021

The wool market continues to struggle in 2021 due to the ongoing effects of the global Covid pandemic. Fine wools have made better recovery progress but marketing broader wool types can be a challenge, particularly for grades containing high vegetable matter and with low yields or poor colour.  There is a surplus of unsold coarser wool types in every wool producing country in the world with a new clip coming to market.  This is mainly due to the China / USA trade conflict in 2019 and then followed by Covid-19 which has had a dramatic impact on wool demand from March 2020 onwards.  However, we are seeing some signs of improvement which is encouraging.

The entire global textile chain has been impacted for various reasons, some of which are as follows.

  1. Many mills have operated at significantly reduced capacity due to Covid and cancelled contracts.  Most are still not back to fully normal operating conditions.
  2. It seems that clothing demand in a global pandemic is not a high priority.  Many shops are still closed worldwide because they are not classified as an essential service.
  3. More people are working from home with a virtual office and significantly diminished or cancelled in person meetings, social events and other activities are all having an influence on demand for textiles at the present time.  There is not an urgency by the consumer to buy new clothing.

There are high hopes that the worldwide vaccine roll out will be the ultimate goal in defeating Covid, ultimately restoring consumer confidence, returning to regular business conditions and our previous normal lifestyle.  The wool trade in general supports this point of view and there is optimism that it is realistic this will be achievable at some point in time during 2021.

At CCWG we have continued our efforts to market Canadian wool when there is an opportunity to do so to our long established domestic and international wool buyers.  We are still accepting wool at all of the company’s extensive national wool depot network and wool grading has continued uninterrupted as well.  Although wool sales continue to be slow, wool payments to producers are now being processed.

Our sincere thanks to Canadian sheep producers for your business, cooperation and patience during this unusually difficult wool marketing period.  Our best wishes to all for successful marketing in 2021.

Yours truly,

Eric Bjergso
General Manager

MISE À JOUR DU MARCHÉ DE LA LAINE PRINTEMPS 2021

Le marché de la laine continue de se débattre en 2021 en raison des effets persistants de la pandémie mondiale de la Covid. Les laines fines ont fait de meilleurs progrès, mais la commercialisation des types de laine plus larges peut être un défi, en particulier pour les catégories contenant une forte teneur en matière végétale et avec de faibles rendements ou une mauvaise couleur. Il y a un surplus de types de laines plus grossières invendues dans tous les pays producteurs de laine. Cela est principalement dû au conflit commercial Chine / États-Unis en 2019, puis suivi par la Covid-19 qui a eu un impact dramatique sur la demande de laine à partir de mars 2020. Cependant, nous voyons des signes d'amélioration, ce qui est encourageant.

L'ensemble de la chaîne textile mondiale a été impactée pour diverses raisons, dont certaines sont les suivantes.

  1. De nombreuses usines ont fonctionnées à une capacité considérablement réduite en raison de la Covid et des contrats annulés. La plupart ne sont toujours pas revenus à des conditions de fonctionnement tout à fait normales.
  2. Il semble que la demande de vêtements pendant une pandémie mondiale ne soit pas une priorité. De nombreux magasins sont toujours fermés dans le monde car ils ne sont pas classifiés comme un service essentiel.
  3. De plus en plus de personnes travaillent à domicile avec un bureau virtuel et les réunions en personne, les événements sociaux et d'autres activités sont considérablement réduits ou annulés ce qui a une influence sur la demande de textiles à l'heure actuelle. Il n'y a pas d'urgence de la part du consommateur à acheter de nouveaux vêtements.

Il y a de grands espoirs que le déploiement mondial du vaccin sera le but ultime pour vaincre la Covid, pour enfin restaurer la confiance des consommateurs, revenir à des conditions commerciales normales et à notre mode de vie normal antérieur. Le commerce de la laine en général soutient ce point de vue et est optimiste que cela soit réalisable à un certain moment en 2021.

Chez CCWG, nous avons poursuivi nos efforts pour commercialiser la laine canadienne lorsque l'occasion se présente de le faire auprès de nos acheteurs de laine nationaux et internationaux établis depuis longtemps. Nous acceptons toujours la laine dans tout le vaste réseau national de dépôts de laine de la compagnie et le classement de la laine s'est également poursuivi sans interruption. Bien que les ventes de laine continuent d'être lentes, les paiements de laine aux producteurs sont actuellement en cours de traitement.

Nos sincères remerciements aux éleveurs de moutons canadiens pour votre coopération et votre patience pendant cette période de commercialisation de la laine particulièrement difficile. Nos meilleurs vœux à tous pour une commercialisation réussie en 2021.

Votre sincèrement,

Eric Bjergso
Directeur général

 

CCWG Wool Market and Business Update – Fall 2020

2019 / 20 Wool Market Update

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In 2019 we reported that the global wool market was under extreme pressure due to the ongoing China / USA trade conflict.  This created widespread uncertainty and indecision throughout the entire global wool supply chain and value chain partners. The end result was that new business was very difficult to conclude and many countries carried significant stock of greasy wool, processed wool and unsold textiles into the 2020 wool marketing season. The consensus at the time was that better marketing conditions would prevail, there was optimism of better days ahead with continued progress being made on a new China / USA trade agreement.
 
When the news broke in January 2020 just prior to the Chinese New Year that a highly contagious virus had been identified in Wuhan City, China it became a game changer.  Little did we know of the significant ramifications that it would have on our everyday life as it quickly spread around the globe.  By mid March most countries were implementing some form of lock down policy along with strict health and safety protocols to try and control the Covid-19 pandemic.
 
Non-essential business which included retail clothing shops faced closure and employees were furloughed, or laid off in vast numbers.  In an unprecedented situation, the global wool market came to a virtual standstill as auctions in most countries and other wool services were cancelled or suspended.  In the textile industry it meant widespread mill closures with many more operating at significantly reduced capacity.  Even today it is far from business as usual with many mills struggling to survive.  In addition, mills were faced with high inventories due to widespread cancellation of orders and a lack of new business.  The consequences of this resulted in a complete back up of the entire wool supply chain. It is not surprising when you consider that clothing does not become a high priority during a pandemic situation.  
 
Further compounding this problem was the cancellation or restriction of travel and most business / social events throughout the year worldwide.  It cannot be underestimated how the significance of Covid-19 control measures has eroded consumer demand and disrupted the entire textile industry.  An exception to this in some cases appears to be better marketing opportunities for handknitting yarns and wool handicrafts, no doubt due to people looking for more at home activities.  Although consumer confidence had been at an all time low there are signs that this is slowly starting to improve which is encouraging.
 
At the present time we are now facing the inevitable second wave of Covid and a return to some of the restrictions that had been previously lifted.  The unknown factor is when can we reasonably expect a return to our previous normal way of life.  As a guide we can look at the progress that China has made. In China every day life seems to be very much back to normal now and has been for quite some time.  This was very evident during their recent Mid Moon Festival which is a national holiday in China from October 1st – 8th.  On the other hand business in China is still facing very difficult conditions, especially for export opportunities as the rest of the world continues to battle Covid.

CCWG Business Update

Covid-19 has had a negative impact on CCWG but fortunately we have been able to mitigate our risk due to the diversification of our business.
 
Our wool business has been most affected but we continue to receive wool at all locations and to grade wool at Carleton Place so that we have the product ready when there is a marketing opportunity.  Until there is evidence of more improvement and stability in the marketplace our policy will still be to accept wool on a consignment basis only until further notice.  We regret the necessity of this decision but it is the only realistic option at this time based on present conditions.  There is a cost effective plan in place to increase our temporary wool storage capacity at Carleton Place if it becomes necessary.  The company is well positioned to participate in a wool market recovery when it occurs, having long term business relationships with our valued customers in Canada and a network of international buyers in seven other countries.  We will have to be patient, there are no predictions at this time of a quick rebound in the market. It goes without saying that wool market improvement will be contingent on demand from China.
 
Our retail business comprised of CCWG Livestock Supplies, Premier Choix Agricole and Real Wool Shop continue to achieve positive financial results for the company with good growth in sales and profitability.  Work continues on updating our ecommerce as we develop efficient and user friendly platforms for marketing our wide range of products.  Staff have implemented a number of recommendations from the marketing study that was completed last year.  In particular there has been a focus on strategies to maximize social media marketing opportunities.
 
Covid-19 has been an extraordinary experience for everyone that we will not soon forget.  You do what you have to in order to survive.  CCWG staff have done an outstanding job of coping and adapting our business under these difficult conditions.  It has not been easy to comply with all the health and safety requirements for sanitizing, social distancing, masks etc.  Sincere appreciation is extended to all staff including grading, administration and retail for the excellent co-operation and effort that has been made at all CCWG locations to ensure customer and staff safety.  We are also pleased to report that there has been minimal disruption in the employment of the companies fifty staff members across the country.
 
Heading for 2021 we look forward to better times and new opportunities.  It will require carefully calculated and planned business decisions with minimal risk exposure for the foreseeable future.  We would be remiss if we did not also thank our loyal customers for their continued patronage.

Respectfully submitted,

Eric Bjergso
General Manager

 

 

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Mise à jour d’affaires et du marché de la laine de la CCWG – automne 2020

Mise à jour du marché de la laine 2019-20

 
En 2019, nous avions signalé que le marché mondial de la laine était soumis à une pression extrême en raison du conflit commercial entre la Chine et les États-Unis. Cela a créé de l’incertitude et de l’indécision généralisée dans toute la chaîne d’approvisionnement mondiale de la laine ainsi que la chaîne des partenaires. Le résultat final a été que les nouvelles affaires ont été très difficiles à conclure et de nombreux pays ont entreposé un stock important de laine brute, de laine traitée et de textiles invendus jusqu’à la saison de commercialisation de 2020. Le compte rendu à l’époque était que de meilleures conditions de commercialisation prévaudraient, et il y avait de l’optimisme quant à des jours meilleurs à venir avec des progrès continus sur un nouvel accord commercial entre la Chine et les États-Unis. 
Lorsque la nouvelle a été annoncée en janvier 2020, juste avant le Nouvel An chinois, qu’un virus hautement contagieux avait été identifié à Wuhan en Chine, ça a changé la donne. Nous ne savions pas grand chose des répercussions importantes qu’elle aurait sur notre vie quotidienne à mesure qu’elle se propageait rapidement autour du monde entier. À la mi-mars, la plupart des pays mettaient en œuvre une certaine forme de politique de confinement ainsi que des protocoles de santé et de sécurité stricts pour tenter de contrôler la pandémie de la COVID-19.
Les entreprises non essentielles, y compris les magasins de vêtements au détail, ont dû fermer leurs portes et les employés ont été mis à pieds en grand nombre. Dans une situation sans précédent, le marché mondial de la laine a été pratiquement paralysé par l’annulation ou la suspension des enchères de laine dans la plupart des pays. Dans l’industrie du textile, cela signifiait des fermetures généralisées d’usines et beaucoup d’entre eux, opéraient à une capacité considérablement réduite. Même aujourd’hui, de nombreuses usines sont loin de fonctionner comme d’habitude et ont du mal à survivre. De plus, les usines étaient confrontées à des stocks élevés en raison de l’annulation généralisée des commandes et du manque de nouveaux contrats. Les conséquences ont été un engorgement complet de toute la chaîne d’approvisionnement de la laine. Il n’est pas surprenant de constater que les vêtements ne deviennent pas une priorité absolue en situation de pandémie.
Ce problème s’est encore aggravé par l’annulation ou la restriction des voyages et de la plupart des événements d’affaires et sociaux tout au long de l’année dans le monde entier. Il ne faut pas sous-estimer la façon dont les mesures de lutte contre la COVID-19 ont érodé la demande des consommateurs et perturbé l’ensemble de l’industrie du textile. Une exception à cela, dans certains cas, semble être de meilleures possibilités de commercialisation pour les fils de laine pour l’artisanat et pour le tricot à la main, sans doute en raison des personnes qui recherchent plus d’activités à la maison. Bien que la confiance des consommateurs n’ait jamais été aussi faible, certains signes indiquent que cette tendance commence lentement à s’améliorer, ce qui est encourageant.
À l’heure actuelle, nous faisons face à la deuxième vague inévitable de la COVID-19 et à un retour à certaines des restrictions qui avaient été levées auparavant. Le facteur inconnu est de savoir quand pouvons-nous raisonnablement nous attendre à un retour à notre mode de vie normal que nous avions auparavant. Nous pouvons nous inspirer des progrès réalisés par la Chine. En Chine, la vie de tous les jours semble être revenue à la normale depuis un certain temps. Cela a été très évident lors de leur récente fête nationale en Chine du 1er au 8 octobre. D’autre part, les affaires en Chine sont toujours confrontées à des conditions très difficiles, surtout en ce qui concerne les possibilités d’exportation, alors que le reste du monde continue de lutter contre la COVID-19.
 
Mise à jour d’affaires de la CCWG
 
La COVID-19 a eu une incidence négative sur notre entreprise, mais nous avons heureusement réussi à atténuer notre risque en raison de la diversification de nos activités.
Notre secteur de la laine a été le plus touché, mais nous continuons à recevoir de la laine à tous les points de dépôts et de classer la laine à Carleton Place pour que le produit soit prêt lorsqu’il y aura une occasion de commercialisation. Tant qu’il n’y aura pas de preuves d’amélioration et de stabilité accrues du marché, notre politique sera toujours d’accepter la laine en consignation jusqu’à nouvel ordre. Nous regrettons la nécessité de cette décision, mais c’est la seule option réaliste à l’heure actuelle, compte tenu des conditions actuelles. Un plan a été mis en place pour accroître notre capacité d’entreposage temporaire de laine à Carleton Place, si cela devient nécessaire. L’entreprise est bien placée pour participer à une reprise du marché de la laine lorsqu’elle se produit, ayant des relations d’affaires à long terme avec nos clients au Canada et un réseau d’acheteurs internationaux dans sept autres pays. Il faudra être patient, il n’y a pas de prédictions pour le moment d’un rebond rapide du marché. Il va sans dire que l’amélioration du marché de la laine dépendra de la demande de la Chine.
Nos activités de vente au détail, qui comprennent la CCWG Livestock Supplies, Premier Choix Agricole et Real Wool Shop, continuent d’obtenir des résultats financiers positifs pour l’entreprise grâce à une bonne croissance des ventes et de la rentabilité. Le travail se poursuit pour mettre à jour notre cybercommerce alors que nous développons des plateformes efficaces et conviviales pour la commercialisation de notre vaste gamme de produits. Le personnel a mis en œuvre un certain nombre de recommandations découlant de l’étude de marketing réalisée l’an dernier. En particulier, on a mis l’accent sur des stratégies visant à maximiser les occasions de marketing dans les médias sociaux.
La COVID-19 a été une expérience extraordinaire pour tous, elle nous marquera pour toujours. Vous faites ce qu’il faut pour survivre. Face à cette situation, le personnel a fait un travail remarquable et a adapté nos activités dans ces conditions difficiles. Il n’a pas été facile de se conformer à toutes les exigences en matière de santé et de sécurité pour le nettoyage, la distanciation sociale, les masques, etc. Une sincère appréciation aux membres du personnel, y compris le classement, l’administration et la vente au détail pour l’excellente collaboration et les efforts qui ont été déployés à tous les emplacements de la CCWG pour assurer la sécurité des clients et du personnel. Nous sommes également heureux de signaler qu’il y a eu très peu de perturbations dans l’emploi des cinquante membres du personnel de l’entreprise à travers le pays.
Pour 2021, nous souhaitons de meilleurs jours avec de nouvelles opportunités. Il faudra prendre des décisions d’affaires soigneusement planifiées et calculées pour minimiser les risques. Nous manquerions à notre devoir si nous ne remerciions pas également nos clients fidèles pour leur soutien continu.
 
Respectueusement soumis,
Eric Bjergso
Directeur Général

 

 

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CCWG Wool Market & Business Update – Fall 2019

2018/19 Wool Market Update

Download 2019 PDF Version

The wool market has been experiencing quite a rough ride for the current wool marketing year.  During the first quarter the market seemed to be on track for stable conditions with both fine wool and crossbred types achieving reasonable prices and demand.  There were expectations at the time that good progress was being made for a new China / USA trade agreement.

This situation however was short lived from April onwards as a number of factors came into play.  Traditionally the market for wool is at its best and consumer confidence is greatest when there is positive growth in global economies and a stable worldwide political environment.  The current situation of widespread indecision and uncertainty has had a detrimental effect on all value chain partners within the entire wool textile industry.  China is the world’s largest market for woolen garments of which approximately 45% is for domestic consumption and the remaining 55% for export.  The escalation of the China / USA trade conflict, with time lines for increased tariff’s put in place by both sides has had a major negative impact on the market.

Wool prices have been quite volatile which has created chaotic conditions for mills and the consequences of de-valued inventories.  In August the Australian market dropped by more than 35%, the market has since managed to claw back some of these losses in September and October.  For several months mills in China have been operating on reduced production schedules from 30% to 60%.   Due to weak demand, stocks throughout the entire wool textile pipeline have been building in China and around the globe.  Cash flow has been very much restricted as a result.   European processors have reported that consumer demand has dropped by more than 20 percent, again due to trade and economic uncertainty from the trade war and other problems such as Brexit and tensions in the Middle East.  Due to the overall state of the global economic situation, consumers are spending less on clothing which is affecting the entire global textile sector.  Consumer confidence throughout China, Europe and other major economies has been severely affected by trade and fears of a worldwide recession.  

Most of the major wool producing countries have experienced declines in wool exports of approximately 10% to 15% compared to a year ago which is mostly attributable to weaker global demand for wool.  In Australia there has been no relief in the severe drought conditions that have existed for quite some time.  Wool production has been hit hard due to these difficult seasonal conditions as producers have been forced to de-stock due to feed shortages.  Wool production in Australia has declined by 14% compared to a year ago and there has been a downward trend now for several years.  In NZ sheep numbers also continue to decline and wool production is lower by 2.5% compared to a year ago.

The Nanjing Wool Market Conference was recently held in Qufu, Shandong China where 500 representatives from 26 countries attended.  The conference is an annual meeting of the global wool industry that facilitates discussion on current industry issues, future developments and market opportunities.  The general consensus at the conference was that wool prices are likely to remain volatile for the next few months and possibly into 2020 before a more sustained and modest improvement will occur.  A bright spot for the Chinese industry has been the popularity of two new star products that utilize significant fine wool and some broader wools to a lesser degree.  Double sided wool fabric and fake faux fur (replicating wool for fur) for winter coats have been selling very well in the Chinese domestic market, examples are attached to this report.

 

In terms of Canadian wool production, a 9.7% increase was recorded compared to the previous wool marketing year.  This is a good sign and we are hopeful for stable wool production in Canada.  However, continuing drought conditions in certain parts of the country is a big concern due to the associated increased feed costs and flock reductions or dispersals that have been occurring.  At the time of this writing we have marketed approximately 60% of the current year’s wool production.  Under normal trading conditions we would expect to be further sold by this time of year.  With the present difficult wool marketing conditions that prevail we will continue with a patient and disciplined wool marketing approach to our regular established markets as opportunities arise.  Our top three export destinations for Canadian wool in 2019 will be China, Egypt and Czech Republic.

It is worth noting that the well prepared wool clips are always easier to market when times are tough compared to inferior quality wools that contain faults such as high vegetable matter, poor colour etc.

CCWG Livestock Supplies, the Real Wool Shop and Premier Choix Agricole represent the retail brands that have served the company well.  This business continues to grow and achieve favourable results.  Sales increased by 6.7% compared to the previous year and net profitability increased by 9.7%.  Significant investment is being allocated to improving the companies online platform as this part of our business continues to expand.  In order to maximize social media marketing opportunities and for future business planning and development, a marketing consultant will be providing recommendations for consideration on these initiatives.

We wish to recognize James McNeely, Wool Superintendent and Donna Zeman, Executive Director who are two long time company employee’s that are taking well deserved retirement.  On behalf of all of us we thank you for your many years of loyal and dedicated service.  Best wishes to both of you for many years of happy retirement.

Sincere thanks is also expressed to all staff, directors and our loyal customers for contributing to our continued success in this our 101st year of business.

Respectfully submitted,

Eric Bjergso
General Manager

 

 

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CCWG Wool Market & Business Update – Fall 2018
2017/18 Wool Market Update 

download 2018 PDF version

In the last 12 months fine wools from all origins have achieved unprecedented record prices although at the time of this writing prices have pulled back for most microns in the last couple of weeks.  Unfortunately the crossbred and broader wools which are much more plentiful in supply have been left behind for the most part and have only recorded marginal increases compared to the previous year.

The growth in fine wool prices can be attributed to two main factors.  There is major concern regarding future available supply due mainly to ongoing Australian drought in most of the major wool producing states.  This has resulted in decreased production ie lower fleece weights due to feed shortages and reduced sheep numbers.  For the 2018/19 season it does not look any better with the current forecast of a 5.7% reduction in the Australian wool clip.
As always, China is playing a major role in influencing the market due to the significant growth of their middle class and upper income earners.  Despite rising prices, consumer demand for wool apparel has continued to grow.  It was only ten years ago when China was mainly a low cost manufacturing and re-exporting destination for most of the wool exported to China.  Today more than half of China wool imports are manufactured into wool products that stay in China and are purchased by Chinese consumers.  Upwards of 70% of global wool production finds its way into this market.  These are the main reasons for the current strong performance of fine wools.  Most leading Chinese textile companies are reporting an increase in domestic sales but a decrease in exports.  This underlines the huge growth potential for domestic sales within China as incomes continue to rise.
In terms of sustainability the key message to encourage consumers to choose wool continues to be that we have a natural fiber, renewable and biodegradable resource.  
In addition to challenging global climatic conditions the current USA / China trade conflict cannot be underestimated.  This escalating trade war remains a key risk to global economic activity and to global textile markets because of the uncertainty it is creating.  It has the potential to completely disrupt the supply chain and to lower consumer confidence which up to this point in time has been very high in most of the major wool consuming countries.  The present situation is that American raw wool, hides etc are now subject to a Chinese duty of 25%.  China accounts for 53% of all USA imports of wool clothing.
Although we have developed markets for Canadian wool in six countries, China will be our major export destination in 2018 for all wool types.  It does 
not appear that the new USMCA agreement will have any impact on Canadian 
wool exports to USA, greasy wool is still rated duty free the same as the previous NAFTA agreement.  Our sales to USA will be lower this year because of the USA / China trade war, American mills have ample supply of wool that would otherwise be exported under normal wool trading conditions.
Our wool volume dropped approximately 4.3% during the 2017/18 wool marketing year but we are encouraged by recent Statistics Canada figures that indicate our sheep and lamb numbers have increased by 1.6% in 2018 compared to 2017, the first increase in 7 years.  However, the drought conditions experienced this year in several provinces has resulted in high feed prices that will likely result in some flock reductions or dispersals.  
The tough trading conditions for the broader wools in 2017/18 resulted in lower sales of almost 14.5% for Canadian wool compared to the previous fiscal year.  Conditions are somewhat improved during the current wool marketing season.  We have found much better selling opportunities compared to a year ago to our regular network of buyers and also some newly established customers.
 
Retail Business
 
The retail business of CCWG achieved better than projected results for the fiscal year ending February 28, 2018 and continues to grow.   Profitability was up at all locations with  overall sales increasing 9.2%  In terms of revenue ratio it is now almost 25% (wool) and 75% (retail).
2018 marks our 100th year in business which is a significant achievement.  Sincere appreciation is extended to all staff and directors for your efforts in helping CCWG reach this major milestone.  You are the company’s most valuable assets.  Of course we must recognize the support we receive from our loyal customers who are the reason we are still operating and growing the business today.  We are fully committed to building relationships with our customers based on the right product at the right price and delivered with exceptional customer service.
Best wishes to all for continued success.

Respectfully Submitted,
Eric Bjergso
General Manager

 

 

30th Nanjing Wool Market Conference and Wool Trade Fair 2018

Eric Bjergso, CCWG General Manager attended the 30th Nanjing Wool Market Conference and Wool Trade Fair on September 11th – 13th in Nanjing Jiangsu Province, China.
Over 500 delegates were registered from the Chinese and international wool trade.
Participants include growers, traders, primary processors, spinners, weavers and garment manufacturers. It provided an excellent opportunity for all international delegates to meet with China’s biggest wool buyers and processors, all in one place. Contracts were negotiated for 700,000 pounds of graded and objectively measured Canadian wool.

 

2016 wool market report from CCWG

Download the 2017 report

Download the 2016 report

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