Let the Good Times Roll? Global Situation and Outlook for Sheep and Wool

Transcription

1 Let the Good Times Roll? Global Situation and Outlook for Sheep and Wool ASI Board of Directors February 218 Chris Wilcox Poimena Analysis and Chairman, Market Intelligence Committee of IWTO

2 Grant and Tatiana Roberts, Broken Hill, New South Wales

3 Prices

4 Lamb Prices on the Rise in Australia and NZ 175 US$ Index: Jan 213 = US$ Index: Jan 213 = 175 USA UK Australia NZ Source: Meat & Livestock Australia, Beef & Lamb NZ, USDA, UK Agriculture and Horticulture Development Board Notes: Trade lamb carcass weight for Australia; all lamb carcass weight export price for NZ; average 9-16lb, choice and prime lamb 2-3 for US; Standard Quality Quotation 12 to 25 kg carcass weight lamb for the UK

5 Good Times for Merino Wool; Not for Broad Wool USc/kg 2,2 Australia and South Africa USc/kg 7 New Zealand and the UK 2, 1,8 1,6 Aus 18um South Af 21um Aus 28um 6 5 United Kingdom - Broad NZ Broad Xbred 1,4 1,2 4 1, Source: AWEX, BWMB, NZ Wool Services Prices to 25 th January 218 NZ Broad crossbred wool is micron. The UK wool price is the British Wool Marketing Board Indicator.

6 Broad-based Price Rise for Commodities Since 216 (US$ basis) Index: Jan 216= Index: Jan 216= 2 Cotton Acrylic 175 NZ Broad wool Aus 18um wool 15 Aus lamb All Items Metals Food Oil Source: The Economist metals and commodity prices US$ index; AWEX for 18 micron wool price; WTiN for NZ wool price; Cotton Outlook for cotton, Mackenzie Wood PCI Fibres for polyester staple and acrylic; Meat and Livestock Australia for Australian lamb prices Data to 25 th January 218

7 Production and Supply

8 World Sheepmeat Production Up ' head World Sheep Numbers mill tonnes World Sheepmeat Production Source: OECD-FAO Note: The year refers to the season ending e.g. 2 = 1999/2 Data in 217 is an estimate and for 218 is a forecast Updated January 218

9 Lamb Production and Exports on the Rise in Australia tonnes carcase weight Australia tonnes carcase weight New Zealand 45 4 Forecast 45 4 Forecast Production Exports 15 5 Production Exports Source: Meat & Livestock Australia, Beef & Lamb NZ, OECD-FAO f forecast Updated January 218

10 Global Wool Production Remains Low mkg clean Production Opening stocks 216 total production 1,14.5 mkg clean 217 total production 1,147.9 mkg clean 218 total production 1,158.6 mkg clean Near 7 year lows Stocks:Use ratio ~11% Source: Poimena Analysis, International Wool Textile Organisation Note: The year refers to the season ending e.g. 2 = 1999/2 Data in 216 is an estimate and data in 217 and 218 is a forecast Updated January 218

11 World Production of Meat Grows mil. tonnes cwe Beef & veal Pigmeat Poultry meat Sheepmeat Annual growth rate Beef +1.% Pigmeat +1.7% Poultry +3.5% 5 Sheepmeat +1.6% Source: OECD-FAO Agricultural Outlook 217 database e estimate f Forecast by OECD-FAO cwe carcase weight equivalent

12 World Production of Wool and Competing Fibres: Wool Cannot Compete on Volume ' tonnes 8, 7, 6, 5, 4, Wool Cellulosics ' tonnes 3, 25, 2, 15, 3, 2, 1, 1, 5, Cotton Synthetic staple Source: Note: CIRFS, USDA, Poimena Analysis, IWTO Market Information Report For wool and cotton the years are seasonal years i.e. 211 = 21/11 season

13 Demand

14 Consumer Confidence Lifts in the Major Wool Consuming Countries Index Jan 28 = Index Jan 28 = US EU China Japan South Korea Source: The US Conference Board, the European Commission and Data to December 217

15 Growing Demand for Lamb by China Million lbs Other UK China Australia Japan Middle East USA Million lbs New Zealand Other Germany Middle East UK China US Source: Beef + Lamb NZ, MLA

16 Higher Sheepmeat Consumption in 218, but not in the US % change yr-on-yr 8% 6% 4% 2% % -2% -4% -6% av f -8% -1% World China EU USA Mexico Canada Total consumption in 217 ( tonnes) 17,712 4,852 1, Per capita consumption Source: OECD-FAO

17 World Consumption of Meat Predicted to Lift mil tonnes cwe Beef & veal Poultry meat Sheepmeat share Pigmeat Sheepmeat % share sheepmeat 5.5% 5.% 4.5% Growth in per capita income and population driving increased meat consumption Higher income leads to higher protein consumption % 3.5% 3.% Growing middle class in key countries such as China focus on quality Increased share for sheepmeat Source: OECD-FAO Agricultural Outlook 217 database e estimate f Forecast by OECD-FAO cwe carcase weight equivalent

18 China Drives Demand for Raw Wool % change y-o-y 4% 2% % -2% % change y-o-y % 8% 6% 4% 2% % -2% -4% -6% Australia New Zealand Total -4% -6% -8% Uruguay Others South Africa USA Source: China Customs, China Wool Textile Association, US Department of Commerce 12 month moving average to November 217

19 Decline in Wool Garment Imports by the US Value - year to November Total knit and woven -3% -11% -11% Total wovenwear -1% Total men's wovens Total women's wovens -14% % Knitwear US$ million Source: OTEXA

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21 Let the Good Times Roll? Prospects for 218 and Beyond Sheepmeat 1. Production of sheepmeat to lift over next five years 2. Economic growth gathering pace and consumers are confident 3. Lower US sheepmeat consumption in 217 and flat in Increased consumption of sheepmeat by developing countries, notably China 5. Higher incomes and higher population driving the increased demand for protein, including sheepmeat 6. Sheepmeat to gain consumption share (from other meat - off a low base) 7. Opportunity to lift per capita consumption in USA? Wool 1. Low production of finer wool, increased production of broader wool 2. Higher economic growth and confident consumers 3. Increased raw wool demand, notably from China 4. But wool clothing imports by US declining 5. Merino wool prices doing well, but reaching a cyclical peak? 6. Long-term demand for superfine Merino wool growing 7. Increased use of Merino wool in active and leisurewear 8. Broad wool prices may be at the bottom 9. Can broad wool recover lost markets or develop new markets?

22 Some Policy Challenges Animal welfare and the consumer Wool Sheepmeat Sustainability Life cycle assessment and wool Rebuilding flock numbers

23 Thank You!