THE official estimate of Australian sheep numbers has been increased by 3.5 million to 74.3m head following the release of new data from the Bureau of Statistics.
Provisional results from the bureau's agricultural census conducted last June have revealed Australia's key meat and livestock organisations including Australian Wool Innovation (AWI) and Meat and Livestock Australia (MLA) have been underestimating the pace of flock rebuilding.
As a result of the new information from the ABS, the Australian Wool Production Forecasting Committee has lifted its previous forecast of opening sheep numbers for 2011-12 by 5 per cent to 74.3m.
However, the committee has shaved five million kilograms off its October forecast for wool production in 2011-12 to 350m kg greasy, mainly because animal health problems caused by wet weather would lower fleece weights in some areas.
"Fleece weights in some states have not been as good as we anticipated at our October meeting," committee chairman Russell Pattinson said.
Mr Pattinson said although the forecast for total wool production for 2011-12 was down on the committee's October estimate, it was still higher than it had been in recent years and was consistent with the previously reported trend of flock rebuilding.
"Results from the combined MLA/AWI grower survey indicate that 90pc of farmers intend to maintain or grow their ewe flocks in 2012," Mr Pattinson said.
Meanwhile, the National Australia Bank (NAB) has tipped a decline in wool prices because global demand was being hit by ongoing volatility and uncertainty in the world economy.
In its December rural commodities wrap, NAB Agribusiness forecast wool prices would average 1139 cents/kg through 2011-12.
NAB Agribusiness general manager Khan Horne said wool prices remained historically high, but faced considerable head winds in the coming months.
"Prices have come off the significant peak reached in June due to weakening demand. In November the eastern market indicator (EMI) was 15pc lower than the highs recorded in June, but it appears to have stabilised in late November and early December at around 1200c/kg," Mr Horne said.
"Looking ahead, demand will be further impacted by the relatively high prices for wool compared with alternative fibres, downgrades to global growth and, most notably, weakness in the big developed economies which are major consumers of wool products.
"Demand for apparel in China and improving textile demand in the US may buffer these impacts somewhat, but it won't be enough to offset the weakness in other markets, particularly the Euro Zone, where consumer confidence remains very low.
"Having said that, NAB Agribusiness also believes there is a limit to how low prices can go, and prices are not expected to dip below the 1000c/kg mark this financial year.
"Wool supplies remain critically tight and the high prices last year led to a rapid winding down of stocks. At the same time, lamb prices remain buoyant, which could see an increase in turnoff if weather conditions sour," Mr Horne said.
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