FOR the past three years Tim McShane has been forced to off-load 40 per cent of his Merino sheep from his Tasmanian Melton-Mowbray property as successive years of drought have crippled the stocking capacity on his family’s midland Tasmanian property, Stockman.
This year, though, he will hold the 6000-odd Merino wether hoggets rather than sell them as he has been forced to do in the past as part of his goal to rebuild his wool production back from 800 to 1500 bales.
“Things are looking a hell of a lot better, we have heaps of feed,” Mr McShane said, as wool production forecast figures showed for the first time in nearly two years signs of stabilisation.
“We’ll probably mate 28,000 Merino ewes to Merino rams next year…we are conscious numbers are down and we are looking long term,” he said.
Nationwide, wool production is tipped to fall to 330 million kilograms greasy (mkg) in 2009-10, the same figure the Australian Wool Production Forecasting committee forecast in March this year.
Although the figure is 30mkg down on this season, commentators see a silver lining as it is the first time wool production forecasts had not been revised downwards in 24 months, and signs of the flock re-building were emerging.
Australian Wool Production Forecasting Committee chairman, Russell Pattinson, said seasonal conditions were still hampering flock rebuilding attempts but figures had started to suggest that the turn-off of adult sheep had slowed “considerably.”
In the first four months of 2009-10, sheep slaughtering fell 19 per cent, while lamb slaughterings were up 6pc and live sheep exported in the September 2009 quarter were down 27pc, according to Australian Bureau of Statistics.
“For a range of reasons, including relative returns form sheep compared with other enterprises, it appears that producers are starting to look again at sheep as a key part of their farming business,” Mr Pattinson said.
He said improved seasonal conditions would continue to assist in flock rebuilding efforts, with some areas in Australia experiencing the best conditions in a decade.
The co-ordinator of SheepConnect Tasmania, Warren Hunt, warned the drought would continue to hang over woolgrower’s heads even after conditions improve, but generally, there was renewed optimism in the wool industry.
“Everyone is more positive but the reality check is sheep numbers are low and revenue capability has been hampered as people don’t have the numbers on farm that they would like to have,” Mr Hunt said.
“But (in Tasmania) they will get the numbers back.”
Rabobank analyst, Adam Tomlinson, pointed out the improving wool industry situation in releases that accompanied its wool market review, observing that “notwithstanding any further supply and demand shocks” domestic wool prices, quoted as the eastern market indicator, would remain above the five year average, AUD8/kg clean.
While wool was one of the hardest hit agricultural commodities when the global credit crisis first started to unwind, he said the flipside was that as the recovery in the global economy gathered pace so too should the demand for wool.
However the decline in wool production for many years has meant synthetic fibres have wedged its way into traditional wool markets.
In particular the extent that wool prices continue to gather pace will in part be determined by the level of competition from alternative fibres.
“Oil prices- a major component for intermediates of chemical synthetic fibres – are expected to remain at higher levels in 2010, keeping the pressure on production costs for these fibres,” Mr Tomlinson said.
Total sheep shorn in 2008-09 were 10pc lower than 2007-08, while state by state Western Australian numbers were down 14pc to 18.74 million head, South Australia down 14pc to 10.06 million head, Tasmanian back 12 pc to 2.55 million.
In NSW and Queensland, over the same period it was a similar story, with sheep numbers down 8pc to 27.35 and 4.08 million head respectively.
Vitcorian numbers dropped 7pc to 18.24 million head.
Hedged largely on the decline in number of sheep in Australia, the committee forecast wool production to weaken in all Australian states, except for Tasmania, which is expected to see a modest 3pc rise in production due to better fleece weights.
The greatest production decline is tipped for Western Australia, which is expected to drop a further 15 per cent to 72mkg, followed by Victoria, down 10pc to 70mkg.
In NSW and South Australia, wool production is tipped to fall 7per cent to 116mkg and 44mkg respectively.
In the micron categories, the nation's largest section, 18.6 micron to 20.5 micron wool was expected to slide 10pc to 115mkg, however superfine wool was not forecast to fall as much as previously expected, with it expected to drop 4pc of production to 45mkg next year.
“This is mainly due to poor seasonal conditions in the past six months in the two largest producing states of NSW and Western Australia,” Mr Pattinson said.
The forecasting committee drew on advice from the six state committees, each of which includes brokers, private treaty merchants, growers, representatives from state department of agriculture, and the Australian Wool Testing Authority.
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