Wool price outlook remains high: bank
Article date: 14 Dec 2009
Source AAP
Wool prices are expected to remain at their high levels in the medium term but any further price increases depend on the rate at which the world economy recovers, Rabobank says.
Purchases of wool products have taken a hit since the onslaught of the global financial crisis, the agribusiness bank says.
However, the current world economic outlook from the International Monetary Fund suggests a broader improvement in economic activity in 2010 will keep wool prices above current levels.
"We are expecting demand to improve with the global economy and keep wool prices above current levels in 2010 and that wool prices will also be underpinned by the increasing cost of alternative fibres," Rabobank analyst Adam Tomlinson said in a statement.
Oil prices are expected to remain at higher levels in 2010 which will keep pressure on production costs for wool fibres, he said.
Wool production, however, will remain subdued following on from years of wool producers switching to alternative businesses like grain, milk or meat production.
"We expect that global wool production in 2010 will rise slightly as better seasonal conditions and reduced input costs increase wool yields per sheep," Mr Tomlinson said.
Rabobank expects domestic wool prices will remain above the five-year average of $AU8/Kg clean, as quoted in the eastern market indicator. |
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