Wool production and exports
Wool production
In 2019, the ABS reported that brokers and dealers received 71.5m kg of wool in WA (Figure 13). This was down from 78.5m kg in 2018, 20% less than the high point of 89.1m kg seen in 2017. The year 2017 saw the highest volume of wool received since 2007 and was largely driven by strong prices and a good season. The volume received in 2019 was the lowest on record due to volatile wool prices, reduced demand and reduced yield per head due to a finer fibre diameter and shorter staple length.
Similarly, 2017 was also a very strong year for wool at a national level, with 380.3m kg of wool received. Since then however, a steady decline in wool receivals has occurred, with 306m kg received in 2019, a reduction of 20%. This was largely due to lower sheep numbers caused by eastern drought conditions and uncertainty surrounding wool prices.
Wool exports
In a similar fashion to wool receivals, since 2017 there has been a two year decline in wool exports from both Australia and WA (Figure 14). In 2017, WA wool exports totalled 63.9m kg (greasy) but this fell to 49.2m kg in 2019, a fall of 23%. National wool exports also fell by 23% over this time, from 358m kg in 2017 to 276.1m kg in 2019.
This decline in exports was due to a drop in demand as well as the previously noted decline in wool receivals. The world’s largest consumers of woollen products are China, the USA and Europe. In China, domestic consumption of woollen products accounts for around half of their wool imports. During 2018 and 2019, China’s retail sales of apparel declined due to reduced income growth, negatively affecting the demand for wool. Weaker consumer confidence and income growth in Europe also resulted in reduced spending on woollen apparel. Exports of woollen textiles and apparel from China have also declined, in part due to the trade dispute between the USA and China. The USA is the largest importer of woollen textiles and apparel, however United State imports declined 4% YOY in 2019 and imports from China even more so, especially after additional tariffs were applied to woollen imports from China. Reduced domestic consumption and exports in China have resulted in a stockpile of wool being created during 2019, reducing Chinese demand for wool (Department of Agriculture, Water and the Environment (DAWE): Natural Fibres- March Quarter 2020).
The value of wool exports has not quite followed the same downward trajectory seen in wool receivals and wool exports by volume, as seen in Figure 15. In value terms, wool exports have been on a strong upwards trend for the last decade, peaking in 2018 at $3.9b nationally and $699.6m in WA. This was largely due to strengthening prices and improving wool quality with an increase of finer wool being produced by more specialised wool producers. The value of exports in 2018 was the highest seen since at least the mid-90’s.
In 2019, there was a decline in the value of wool exports due in part to a reduction in prices, but also a large decline in the volume exported due to tough seasons in the east and in parts of WA. Despite the decline, WA wool exports reached $608.6m, which was in the 83rd percentile (since 1996) meaning it was higher than 83% of the export values reached in this time.
As evident in Figure 16 and Figure 17, China dominates WA’s wool exports and has done for well over a decade. In 2019, China accounted for 87% of the volume (43m kg greasy) and 88% of the value ($537.4m) of WA wool exports. Nationally, China accounted for around 77% of wool exports, making it the dominant player for the whole of Australia.
India was the second largest market for WA wool, taking 6% of wool exports, followed by Czechia with 2%.
