British Wool warns of 10 million kilos of unsold wool

The UK’s wool industry could be in for a close shave as the British Wool Marketing Board warned its stocks of unsold wool are sitting more than three times higher than normal.

The news came as British Wool has announced it will continue to collect and receive wool as normal during the Covid-19 pandemic.

However, the body announced that the pandemic had already caused major issues in the international wool market, with around 10 million kilos of wool from last year left unsold.

British Wool chief executive Joe Farren explained new protocols would be in place to ensure the safety of producers as well as British Wool staff.

The body has recently collaborated with industry partners to establish the Shearing Register and the Covid-19 checklist for shearers and farmers.

Impact on global wool markets

A spokesman for British Wool explained that while the pandemic has had a significant impact on the global wool market, reduced demand from the Chinese market in January meant it hit the marketing board’s stocks particularly badly.

The global crossbred wool market slowed significantly in February and then shut completely at the beginning of March and remains closed.

February to May is normally the busiest selling period of the year and, as a result, British Wool has circa seven million kilos extra of unsold 2019 clip wool on top of the circa three million kilos that we would normally be carrying at this time of year.

The market obviously closed in New Zealand at the same time meaning that New Zealand wool agents and auctions will also be carrying significant unsold stock.

Joe said: “The severe, hopefully, short term, drop in demand for wool products coupled with the huge global overhang in crossbred wool stocks from the 2019 season is likely to severely impact prices for the next 12-18 months.

“It will also make our longer-term objective of repositioning British Wool as a premium product more challenging.

However, finding new demand for our wool in China at attractive prices will be a key driver of the early stages of recovery in British Wool prices. We must be more determined than ever in this objective.

“Wool producers can be assured that British Wool will be at the forefront of leading the growth and renewal of wool values, but this will take time. We will emerge stronger from this period, in particular, because our China-based product development strategy will be further advanced and helping to pull prices up out of the trough.”

Joe added: “During these difficult and unprecedented times, British Wool continues to be proactive – maintaining service to producers, working with the industry on the shearing shortage and moving to a remote on-line auction.

Also, during the last year, we achieved a first major new buyer in the auction room for a decade (over a million kilos) plus a number of smaller buyers from China and India had started bidding at our auctions prior to the market shutting.

“It’s important for producers, and the UK sheep sector, to have confidence they can continue to rely on British Wool as a trusted partner in providing a high level of service and in increasing wool returns for producers in the long term.”

 

NSA chief executive Phil Stocker said: “With so much uncertainty generally, we welcome that we are in a situation where shearing gangs can operate and wool can be moved.

“However, news of the carryover of 10 million kilos, nearly a third of British Wool’s annual clip, is less welcome, although the UK is not alone in this.

Fortunately, most British sheep farmers are used to wool covering shearing and handling costs and often not a lot more, with few farmers relying on wool values for a living.

“We do have a small number of sheep farmers who continue to do well out of wool, and who have managed to climb out of relying on what is essentially a global commodity market. In my opinion, this is the only way to remove ourselves from global economic impacts and achieving this on a national scale is a big challenge.”