A leading wool economist will tell the annual IWTO Congress in Edinburgh this week that while global wool textile demand currently remains solid, it is starting to peak and there are signs that it may soften in the next six months.
In his presentation 'Taking Stock: Apparel Wool Industry', Chief Economist Woolmark Market Intelligence, Chris Wilcox, says that the results from the latest Woolmark Business Survey show orders within the pipeline, particularly at combing, are starting to soften. At the same time, pipeline stocks are starting to build.
“Last year and the first quarter of this year have been very favourable for wool demand,” he says.
“Strong global economic growth, favourable fashion trends, the best orders in the industry for 5 years and high synthetic fibre prices have translated to excellent demand,” he says.
Mr Wilcox says that global economic indicators are weakening, although they remain relatively solid.
“A warmer 06/07 winter in the northern hemisphere will possibly affect ordering for the next Autumn/Winter season and high medium merino wool prices against competing fibres are combining to bring softer demand for wool tops and an expected drop in worsted spinners' orders, notably from East Asia and China” he explains.
“In particular, medium merino wool prices are now almost seven times the price of cotton, which is the highest level since 1989.”
Mr Wilcox says that while current wool prices may be maintained for a few months yet, falling demand and a weak US$ may cause wool prices to slide from current levels at some stage after that.
“Peaking demand and rising top and yarn stocks hint at lower raw wool prices in the not too distant future, although lower wool supplies in 2007/08 will moderate the extent of any slide” Mr Wilcox told IWTO.
Australian Wool Innovation Limited
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