Wool prices hit record high through drought

Last week wool prices hit an all time high, smashing through the $20 a kilo mark on the back of continued strong Chinese investment and lower stock numbers across the 25,000 Australian wool producers, while red meat prices, especially lamb, have also remained very strong.

Last week when the Eastern Benchmark Indicator recorded 2027c/kg clean, it represented more than a 25 per cent increase in the last 12 months, while lamb prices are also holding steady with good returns for conditioned stock.

Davidson, Cameron, McCulloch group manager Daniel McCulloch said that while there is nothing good about a drought, 24 months of very strong commodity prices have managed to keep some producers afloat.

“I’m hearing that this drought is worse than 1965 and 1902, although the difference has been those strong export markets – wool is as good as it has ever been,” he said.

“The drought is putting a lot of people under pressure, but if I had to pick a positive it is those high prices and the fact that people have learnt to feed stock better with things like lick feeders and additives.”

While fodder, both grain and hay, prices continue to soar some farmers are making the decision to continue feeding stock in the hope of cashing in at the market, or at least staying afloat on the back of the prices, although not all producers can stretch that far.

“Hay and grain are at about $500 a tonne, so at a maintenance ration of about a kilo a day for sheep, that’s 50 cents each,” Mr McCulloch said.

“That is one of those tough decisions farmers have to make, we have already seen many forced to sell off their breeding stock, but others are holding on.

“A drought won’t be broken on a forecast, and even if it rains tomorrow it will be late August or September before there is any benefit – it’s not real good.”