|U.S. Wool Season Underway
(June 1, 2006) As forecasters paint a rosier picture of economic activity worldwide and if the U.S. dollar stays relatively weak, the U.S. wool market should be in good shape for the season and the year. June is a key month for foreign buyers and the relatively weaker U.S. dollar might help increase competition, put pressure on prices and boost sales. However, the U.S. dollar saw some strengthening in late April and early May, which may hamper exports.
Economic forecasters anticipate growth in key economies, which is expected to positively influence wool prices in 2006 (Woolmark, 4/28/06). The largest apparel wool-consuming countries – China, Japan and the United States – are all expected to see positive growth in 2006, with the United States being particularly strong.
China continues to be the leading consumer of raw wool and wool apparel. As China's combing capacities have grown, imports of greasy wool have dominated its imports – 86 percent in January and February (Woolmark, 4/21/06). In addition, China is becoming an increasingly important player in producing greasy wool. During the 2005 to 2006 season, it is anticipated that China's wool production will be 16-percent higher than previous seasons, and rival New Zealand in its clean-wool production (Woolmark, 4/28/06). It is uncertain at this point what impact, if any, this will have on future greasy wool import levels. It will depend on production trends, but also the volume of demand.
In April, wool shearing in the United States was underway in most areas although delayed due to the weather in the western states. In many southern and western states, yields were below average due to a dry and windy winter (U.S. Department of Agriculture's (USDA) Agricultural Marketing Service (AMS), 4/14/06).
Overall, it was found that prices were "firm to higher" in April on sales on a clean basis (USDA/AMS, 4/21/06). By late April, USDA reported that wool less than 75 millimeters was discounted by $0.10/lb. to $0.20/lb. clean. Additionally, classed and skirted wool usually received a $0.10/lb. to $0.20/lb. premium.
In the Fleece States, 28-micron wool held steady between March and April at $0.95/lb. In the Territory States, most micron categories gained from 1 percent to 25 percent, although some weakening was observed. Twenty-eight micron wool gained 25 percent to average $0.94/lb. in April, while 19 micron lost 1 percent at $2.08/lb. and 27 micron was down 1.4 percent to $1.09/lb. In Texas and New Mexico, the finer, 20-micron wool gained 11 percent in April to average $2.08/lb. and 21-micron wool gained 5 percent at $1.87/lb.