Australian drought could hit wool supply and prices

Mark Lane | 10th August 2018

NEW SOUTH WALES – The ongoing drought in wool growing regions of Australia could hit supply and prices, according to industry sources. Figures from the Bureau of Meteorology show Southern Australia has just experienced its second-driest autumn on record, with rainfall 57mm (2.24in) below average. In July, less than 10mm of rain was recorded in New South Wales, prime farming territory, and ongoing dry conditions are forecast to continue.

This week, Australian officials said 23 per cent of New South Wales is classed as being in intense drought, while the rest is in drought or drought affected. The state produces around 25 per cent of Australia’s agricultural output. Other parts of Australia are also suffering, with over half of Queensland is in drought and some areas of Victoria and South Australia also seeing dry conditions.

In its latest bulletin, Australian Wool Innovation (AWI) said: “What is affecting [wool] supply at the moment is the fierce drought that continues to bite across many of our wool growing regions. With the wool prices and sheep meat values being in such a good state at the moment, sheep farmers have been resolutely retaining their core breeding stock at least, which normally wouldn’t be affordable on past market prices during drought.

“It cannot be underestimated the damage to supply this will cause in the short term, but if there is no break before too long, this will only get exponentially worse for the longer term.”

Alarmingly, stock agent Simon Bourke told the ABC: “We’re selling livestock we don’t want to sell… down the track there’s really not going to be too many cattle or sheep left.”

Drought conditions are nothing new in Australia, however, like other parts of the world, the frequency of dry periods has escalated in recent years. The Australian government itself has said that some of the aspects that impact on drought, including high atmospheric pressure, could be due to human-induced climate change.

Australia is one of the world’s largest wool producers, producing around 25 per cent of greasy wool sold on the world market. Wool is produced in all Australian states except the Northern Territory. New South Wales produces the greatest volume of wool, followed by Victoria, Western Australia and South Australia. In 2016-17, it is estimated that over 74.3 million sheep were shorn in Australia.