Penalties trim twice yearly shearing

This is according to Mecardo senior market analyst Robert Herrmann, who presented at the recent Best Wool Best Lamb conference in Bendigo, Victoria, on the current premiums and penalties being paid for different staple lengths.

“If we’re talking about shearing twice a year with the objective of getting more money per kilogram, then at the moment, buyers aren’t giving it to you,” Mr Herrmann said.

While the message from wool processors has been that much of the Australian wool clip was too long, this was not supported by data, he said.

“If this message is correct, then shorter lots should attract a premium – this would be a normal economic lever to attract more of the type,” he said. 

“There has been a conversation going on for some time with growers being told their wools are too long.

“But what we are saying is that the data doesn’t support that by having longer wool you’re going to be severely impacted.”

While staple more than 100 millimetre in length had recorded discounts for 17 and 18 Micron Price Guide (MPG) wool that was super sound, Mr Herrmann said there was little evidence penalties applied to long, lower strength staples. 

The current market applies serious discounts to less than 63mm for average staple strength wool, no great discounts were evident for long staples in the 35 to 39 Newtons per kilotex range.

He said discounts were evident for better type fine wool which were below 63mm and above 100mm, while the discounts for 21-23MPG range, above 100mm, were negligible.

In the past five years, Australian Wool Exchange “sweet spot” recorded for the 17 MPG fell between 68mm and 90mm, with severe discounts from about 10 per cent, or 200 cents a kilogram, for staple length outside this region.

Similarly, in this same period, 21MPG optimal length fell between 58-110mm, before dramatic discounts above 10pc, or 100c/kg, were applied.

“You can see the sweet spot is in the 70-90mm but what is concerning is once you get to 58mm you’re getting the same discount for wool that is 110-120mm,”Mr Herrmann said.

“It is the same story for 21MPG, below 55mm the discounts are the same for staple length greater than 100mm.

“If you have 120mm length wool, you would want to have a good marketing plan… over 120mm can get ugly and you can be severely impacted by penalties.”

However, he said, while anecdotal reports suggest the volume of wool increased, as well as improved staple length, due to six monthly shearing, it was not clear by how much.  

Animal health was also reported as a bonus with increased lambing numbers and potential reduction in crutching requirements.

“What we have heard is that you produce more wool, it is better wool and more valuable but in the end you are balancing off against an increase in labour costs, as well as another shearing, and the risk of short wool discounts” Mr Herrmann said.

“We have seen the discounts drop away and now they’ve come back in again as we get more volume - it is a fragile thing.

“It is not as simple as going out a saying lets breed sheep that don’t grow long wool, that extra length is just additional bales of wool.”

Mr Herrmann suggested greater research be conducted into the on-farm benefits of increased wool harvesting to verify statements.

“It is an area that needs more work,” he said.

“It is normal for woolgrowers to want to meet customer requirements but at the same time, meeting these new requirements cannot increase the net cost to the business unless there is an off-setting increase in income.

“Look what happened with crossbred wool – the message last year was to forget about merino wool and be paid 900c/kg for your crossbred wool.

“This is another example of perhaps where we should be careful about the market lead.”​