Wool Production Forecast Report (Sep 2013)

August 2013 Australian Wool Production Forecast Report Australian Wool Production Forecast Committee Summary The Australian Wool Production Forecasting Committee (AWPFC) has maintained its estimate of shorn wool production for 2012/13 at 350 million kilograms (mkg) greasy. For 2013/14, the Committee's second forecast of shorn wool production remains unchanged at 345 mkg, 1.4% below 2012/13 production. Table 1 summarises the estimates and forecasts. Summary of wool production estimates and forecasts for Australia Parameter Opening Sheep Number (million) Sheep Numbers Shorn (million) Average Cut Per Head (kg) Shorn Wool Production (mkg greasy) 2011/12 Final Estimate 73.1 76.4 4.48 342 2012/13 August estimate 74.7 78.8 4.43 350 Change y-o-y (%) 2.1% 3.1% -1.1% 2.3% 2013/14 2nd forecast 73.9 78.4 4.39 345 Change y-o-y (%) -1.0% -0.4% -0.8% -1.4% Table 1: The forecast decline in 2013/14 seasonal production reflects the expected decrease in opening sheep numbers (-1.0%) due to increased sheep turn-off in 2012/13, and an expected reduction in average fleece weights (-0.8%) due to the dry seasonal conditions experienced in many wool growing regions in the first half of 2013. The opening sheep numbers for 2012/13 has been adopted from ABS' most recent figures, while for 2013/14 opening sheep numbers are consistent with those forecast by MLA. Regionally, year on year declines in 2013/14 wool production are forecast for New South Wales (-4.4%) and Queensland (-8.6%) which outweigh expected slight increases in wool production in Victoria (1.1%), Tasmania (1.3%), South Australia (1.7%) and Western Australia (0.6%). Table 2 summarises the estimates and forecasts. A more FURTHER INFORMATION Mr Russell Pattinson, National Committee Chairman Tel: +61 0419 872 684 © Australian Wool Innovation Limited April 2011. This document may be reproduced and disseminated with attribution to Australian Wool Innovation Limited (ABN 12 095 165 558). DISCLAIMER AWI Limited makes no representations about the content and suitability of the information contained in these materials. Specifically, AWI does not warrant, guarantee or make any representations regarding the correctness, accuracy, reliability, currency, or any other aspect regarding characteristics or use of information presented in this material. The user accepts sole responsibility and risk associated with the use and results of these materials, irrespective of the purpose to which such use or results are applied. In no event shall AWI be liable for any loss or damages (including without limitation special, indirect, or consequential damages), where in an action of contract, negligence, or tort, arising out of or in connection with the use of performance of these materials. Australian Wool Production Forecast Report August 2013 detailed comparison of greasy wool production by state can be found in Table 1, 2 and 3 in the Appendix to this report. Table 2: Summary of wool production estimates and forecasts for individual states1 QLD 13.7 12.5 -8.6% NSW 125.5 120.0 -4.4% VIC 76.9 77.7 1.1% TAS 10.3 10.4 1.3% SA 54.0 54.9 1.7% WA 68.6 69.0 0.6% National 350 345 -1.4% Shorn wool production (mkg greasy) 2012/13 August Estimate 2013/14 August Forecast Change y-o-y (%) In keeping with normal Committee practice, this forecast for greasy wool production has been rounded to the nearest 5 mkg greasy. Major data inputs These forecasts are based on detailed consideration by the state and national committees of current seasonal conditions, information gathered on sheep producer and wool grower intentions, including the MLA/AWI Lamb Survey results, AWTA test data, ABS sheep and lamb turn-off, National Livestock Recording Service yardings data and AWEX auction statistics and matched brand analysis. ABS data Table 3 summarises ABS flock statistics. ABS opening sheep numbers for 2012/13 were revised at both the state and national level, the latter of which was revised to 74.7 million, an increase of 2% from the 2011/12 season. Table 3: ABS data Flock (million head at June): Breeding ewes: Lambs marked: Ewes mated: Marking % ABS National flock numbers 2008 76.9 45.4 NA NA NA 2009 72.7 40.9 32.5 37.7 85% 2010 68.1 42.3 31.9 NA NA 2011 73.1 41.8 33.3 37.4 89% 2012 74.7 44.9 35.4 39.60 89% % 2% 7% 6% 6% 0% 1 During the course of August state meetings, ABS issued revised 2012/13 opening sheep numbers. These needed to be taken account of in deliberations at the national committee meeting, requiring some minor adjustment to previous state numbers Australian Wool Production Forecast Report August 2013 National ABS sheep turn-off statistics from Australian farms are shown in Table 4, for the full financial year 2012/13, compared to the equivalent period in 2011/12 and the corresponding full financial year average for the five years 2007/08 ­ 2011/12. Table 4: ABS Sheep turn off data for 2012/13 (Full financial year) Parameter Sheep slaughter ('000 hd) Sheep weights (kg/hd c wt) Mutton production (tonnes c wt) Lamb slaughter ('000 hd) Lamb weights (kg/hd c wt) Lamb production (tonnes c wt) Live exports (hd) Full Financial Year Full FY Full FY % 2011/12 2012/13 5,175 23.13 119,713 18,879 22.21 419,329 2,562 8,192 22.36 183,157 21,122 21.64 456,997 2,058 58% -3% 53% 12% -3% 9% -20% 5 Financial Yr Avg Full FY 7,901 21.96 173,534 19,432 21.28 413,492 3,335 % 4% 2% 6% 9% 2% 11% -38% The ABS data show considerable year on year increases in sheep and lamb slaughter (58% and 12% respectively), and a decrease in live exports (-20%). When compared to the longer term (5 year) average ­ slightly increased adult sheep slaughter (4%), mutton production (6%), and significantly reduced live exports (-38%) are evident. There is also evidence of increased lamb slaughter (+9%) and lamb production (11%) when compared to the longer term average. AWTA wool test data (Full financial year) AWTA has developed a specific Key Test Data (KTD) report for wool production forecasting purposes. This report generates monthly greasy test volumes within diameter categories. Comparative full financial year results are shown in Table 5, and Figure 1 and 2, based on this new report. A historical comparison of the Australian micron profile percentage share can be found in Table 5 in the Appendix to this report. Table 5: Comparison of full financial year AWTA Key Test Data wool test volumes Year <16.5 17 18 19 20 21 22 23 24 24/25 25/26 28/30 >30.5 TOTAL Parameter AWTA Key Test 2010/11 Data FY 2011/12 Total gr. Tons 2012/13 YTD - YOY% 2012/13 5,688 17,978 40,965 62,558 67,060 50,306 31,306 19,963 11,099 14,650 20,412 18,545 11,577 372,107 6,623 20,227 43,059 61,606 59,623 44,243 29,703 19,106 10,480 15,251 20,962 16,772 11,904 359,557 9,420 25,773 49,072 64,610 61,941 44,215 26,902 15,129 42% 27% 14% 5% 4% 0% -9% -21% 8,668 17,157 23,062 14,636 -17% 12% 10% -13% 9,202 369,788 -23% 3% The AWTA Key Test Data presented in Table 5, Figure 1 and Figure 2 indicate that: 2012/13 financial year wool test volumes were 3% higher than in 2011/12; Australian Wool Production Forecast Report - August 2013 - Increases in year-on-year production volumes were greatest in Superfine, fine and medium Merino (< 20.5 µm) and cross-bred (24.6 ­ 28.5 µm) diameter categories; and Decreases are reported in medium (21.6 ­ 24.5 µm) and coarse cross-bred (>28.5 µm) diameter categories. Comparison of monthly AWTA Key Test Data wool test volumes Figure 1: Figure 2: Across-years comparison of AWTA Key Test Data wool diameter profile Australian Wool Production Forecast Report AWEX matched brand analysis August 2013 According to the AWEX matched brand analysis, overall, first hand bales offered were 1.8% higher in 2012/13 compared to 2011/12, with increases in Northern (+0.1%), Southern (+1.2%) and Western (+6.2%) centres. Bureau of Meteorology (BOM) seasonal outlook The transversal section of Australia from the northwest to the southeast received good rainfall from May to July this year, whereas Queensland and the Western Australia wheatbelt experienced very dry conditions. In the past month, the majority of Australia received very little rainfall with the exceptions of Victoria, Tasmania, southwest Western Australia, and southeast South Australia. Looking forward, the Bureau seasonal rainfall outlook for Spring 2013 is shown in Figure 3. Figure 3: Chance of exceeding median rainfall (September to November 2013) Southeast Australia, extending to the southern half of Queensland and the southern coastline of Western Australia, is forecast to have a wetter than normal season. The majority of Western Australia and the northern half of Queensland are forecast to have an average season of rainfall. The BOM is predicting Tasmania, coastal Western Australia and the northern half of Queensland to have warmer than normal days and nights in spring. Cooler days are more likely for central and northwest Victoria, as show in figure 4. Australian Wool Production Forecast Report Figure 4: August 2013 Chance of exceeding the median maximum temperature (September to November 2013) State Committee inputs The following provides a summary of conditions in each state as reported by State Committees in August 2013. Queensland For 2013/14, a decrease is forecast for opening sheep numbers and number of sheep to be shorn, fleece weight and greasy wool production from 2012/13, to reflect the higher slaughtering in 2012/13 and the very dry seasonal conditions during 2013 which have left large parts of the state drought declared. New South Wales For 2013/14, a decrease in opening sheep numbers and number of sheep to be shorn due is expected due to increased sheep and lamb turn-off in 2012/13. A decrease is also forecast in fleece weight due to the dry seasonal conditions experienced up to May, despite good rainfall in the southern regions from June to August which likely came too late to have an influence before spring. This is expected to lead to a fall in shorn wool production. Victoria For 2013/14, a decrease in opening sheep numbers is forecast (but not sheep shorn numbers) from the previous season due to increased slaughtering in 2012/13. Fleece weight Australian Wool Production Forecast Report August 2013 is to remain unchanged from 2012/13 resulting in an expected slight increase in shorn wool production. Tasmania For 2013/14, opening sheep numbers remain largely static from 2012/13, while a slight increase in number of sheep to be shorn (and thus shorn wool production) is forecast. Fleece weight is expected to remain unchanged from 2012/13. South Australia For 2013/14, an increase in opening sheep numbers and number of sheep to be shorn is forecast to reflect a breeding up in the flock in 2012/13, while fleece weight is to remain unchanged from 2012/13. This is expected to lead to an increase in shorn wool production. Western Australia For 2013/14, an increase in opening sheep numbers and number of sheep shorn is forecast. Fleece weight has remained unchanged from 2012/13 due to above average seasonal conditions to the end of July along the south coast, excluding the wheatbelt, and early August rainfall across most sheep areas. As a result, an increase is expected in shorn wool production. Australian Wool Production Forecast Report Appendix Table 1: August 2013 Changes to recent state level forecast for 2012/13 wool production QLD 3.6 3.6 3.81 13.7 NSW 28.0 28.2 4.45 125.5 VIC 15.3 18.3 4.20 76.9 TAS 2.3 2.6 3.88 10.1 SA 11.3 11.0 5.00 55.0 WA 14.6 15.2 4.50 68.6 National 75.1 78.9 4.43 350 2012/13 4th Forecast (Apr-13) Opening Sheep Number (million) Sheep Numbers Shorn (million) Average Cut Per Head (kg) Shorn Wool Production (mkg greasy) 2012/13 August Estimate Opening Sheep Number (million) Sheep Numbers Shorn (million) Average Cut Per Head (kg) Shorn Wool Production (mkg greasy) Change (%) Opening Sheep Number Sheep Numbers Shorn Average Cut Per Head Shorn Wool Production QLD 3.5 3.6 3.81 13.7 NSW 27.6 28.2 4.45 125.5 VIC 15.9 18.3 4.20 76.9 TAS 2.4 2.6 3.90 10.3 SA 10.9 10.8 5.00 54.0 WA 14.4 15.2 4.50 68.6 National 74.7 78.8 4.43 350 QLD -3.1% -0.1% 0.0% 0.0% NSW -1.5% 0.0% 0.0% 0.0% VIC 4.1% 0.0% 0.0% -0.1% TAS 3.5% 1.3% 0.5% 1.7% SA -3.6% -1.8% 0.0% -1.8% WA -1.4% 0.0% 0.0% 0.0% National -0.6% -0.2% 0.0% 0.0% Table 2: Comparison of the 2011/12 estimate against the 4th 2012/13 production forecast QLD 3.7 3.7 3.76 13.7 NSW 26.9 27.2 4.50 122.3 VIC 15.2 18.3 4.31 78.7 TAS 2.3 2.6 3.88 10.3 SA 11.0 10.2 5.20 53.2 WA 14.0 14.4 4.43 63.9 National 73.1 76.4 4.48 342 2011/12 Final Estimate Opening Sheep Number (million) Sheep Numbers Shorn (million) Average Cut Per Head (kg) Shorn Wool Production (mkg greasy) 2012/13 August Estimate Opening Sheep Number (million) Sheep Numbers Shorn (million) Average Cut Per Head (kg) Shorn Wool Production (mkg greasy) Change % Opening Sheep Number Sheep Numbers Shorn Average Cut Per Head Shorn Wool Production QLD 3.5 3.6 3.81 13.7 QLD -4.5% -1.6% 1.3% -0.3% NSW 27.6 28.2 4.45 125.5 NSW 2.6% 3.8% -1.1% 2.6% VIC 15.9 18.3 4.20 76.9 VIC 4.7% 0.3% -2.6% -2.3% TAS 2.4 2.6 3.90 10.3 TAS 1.5% -0.6% 0.5% -0.1% SA 10.9 10.8 5.00 54.0 SA -1.1% 5.5% -3.9% 1.4% WA 14.4 15.2 4.50 68.6 WA 2.8% 5.7% 1.6% 7.4% National 74.7 78.8 4.43 350 National 2.1% 3.1% -1.1% 2.3% Australian Wool Production Forecast Report Table 3: August 2013 Comparison of the 2012/13 estimate against the 2nd 2013/14 production forecast QLD 3.5 3.6 3.81 13.7 NSW 27.6 28.2 4.45 125.5 VIC 15.9 18.3 4.20 76.9 TAS 2.4 2.6 3.90 10.3 SA 10.9 10.8 5.00 54.0 WA 14.4 15.2 4.50 68.6 National 74.7 78.8 4.43 350 2012/13 August Estimate Opening Sheep Number (million) Sheep Numbers Shorn (million) Average Cut Per Head (kg) Shorn Wool Production (mkg greasy) 2013/14 2nd Estimate (Aug-13) Opening Sheep Number (million) Sheep Numbers Shorn (million) Average Cut Per Head (kg) Shorn Wool Production (mkg greasy) Change % Opening Sheep Number Sheep Numbers Shorn Average Cut Per Head Shorn Wool Production QLD 3.4 3.4 3.71 12.5 QLD -3.4% -6.3% -2.5% -8.6% NSW 27.0 27.6 4.35 120.0 NSW -2.0% -2.2% -2.3% -4.4% VIC 15.7 18.5 4.20 77.7 VIC -1.6% 1.1% 0.0% 1.1% TAS 2.4 2.7 3.90 10.4 TAS -0.8% 1.3% 0.0% 1.3% SA 11.0 11.0 5.00 54.9 SA 0.8% 1.7% 0.0% 1.7% WA 14.5 15.3 4.50 69.0 WA 0.5% 0.6% 0.0% 0.6% National 73.9 78.4 4.39 345 National -1.0% -0.4% -0.8% -1.4% Historical Australian Production Figures Table below provides historical sheep numbers, wool production and fleece weight statistics since 1991/92 for background information. Table 4: Australian wool production statistics since 1991/92 Year 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13f 2013-14f Opening Sheep Number (million) 163.1 148.1 138.0 132.5 120.8 121.0 120.1 117.4 115.4 118.5 110.8 106.1 99.2 101.2 101.1 91.0 85.7 76.9 72.7 70.8 73.1 74.7 73.9 Sheep Numbers Average Cut Per Shorn Head (million) (kg) 180.9 4.4 178.8 172.8 156.2 145.6 152.0 150.0 153.6 144.2 139.5 118.6 116.6 104.7 106.0 106.5 101.4 90.2 79.3 76.2 76.2 76.4 78.8 78.4 4.6 4.5 4.4 4.5 4.3 4.2 4.3 4.3 4.3 4.7 4.3 4.5 4.5 4.3 4.2 4.4 4.5 4.5 4.5 4.5 4.4 4.4 Shorn Wool Production (mkg greasy) 801 815 775 682 655 661 633 665 619 602 555 499 475 475 461 430 400 362 343 345 342 350 345 Australian Wool Production Forecast Report Table 5: August 2013 Australian micron profile of AWTA wool test volume statistics since 1991/92 (% share) AWTA KTD Micron Percentage Split of Wool Production (um) <16.5 17 Year 1991/92 0.1% 0.7% 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 0.0% 0.3% 0.1% 0.5% 0.1% 0.6% 0.0% 0.6% 0.2% 0.8% 0.2% 1.2% 0.2% 1.1% 0.1% 1.0% 0.2% 1.3% 0.3% 2.0% 1.0% 3.9% 0.7% 3.6% 1.4% 4.7% 18 3.2% 1.9% 2.4% 3.5% 3.3% 3.9% 4.5% 4.2% 4.2% 5.2% 7.2% 9.8% 9.9% 9.7% 19 7.9% 5.4% 5.9% 8.6% 8.2% 9.7% 9.8% 8.8% 9.3% 20 21 22 23 15.2% 21.5% 20.0% 13.4% 24 24/25 25/26 28/30 >30.5 7.1% 5.5% 2.9% 1.6% 1.0% 7.9% 7.4% 4.7% 6.0% 5.3% 5.4% 5.1% 5.2% 5.1% 3.7% 3.4% 3.5% 3.6% 3.9% 4.3% 4.1% 3.8% 4.1% 3.9% 4.2% 4.6% 3.0% 2.8% 2.8% 2.7% 2.3% 2.6% 2.7% 2.9% 3.6% 3.8% 3.7% 3.8% 4.1% 4.5% 4.4% 4.8% 5.1% 5.4% 5.5% 5.8% 6.2% 1.9% 1.9% 2.0% 1.8% 1.9% 1.8% 2.0% 2.4% 2.8% 3.1% 2.9% 2.9% 3.1% 2.9% 3.2% 3.6% 3.8% 3.9% 5.0% 4.7% 4.0% 1.6% 1.7% 1.7% 1.6% 1.8% 1.5% 1.5% 1.9% 1.9% 1.9% 1.7% 1.8% 2.0% 1.6% 2.1% 2.2% 2.2% 2.3% 3.1% 3.3% 2.5% 12.0% 19.9% 20.6% 15.6% 10.0% 12.1% 18.8% 20.8% 15.7% 10.0% 15.2% 20.9% 19.9% 13.0% 15.3% 20.8% 18.5% 13.2% 15.3% 20.1% 18.3% 13.1% 14.8% 19.4% 18.3% 12.8% 14.6% 19.6% 18.6% 14.0% 14.4% 19.1% 18.2% 13.6% 7.7% 6.6% 7.5% 6.2% 5.9% 6.2% 5.5% 4.4% 4.6% 5.4% 5.3% 4.1% 7.0% 8.1% 7.4% 7.7% 7.6% 7.7% 6.8% 4.1% 2.9% 3.6% 3.2% 2.9% 3.4% 3.0% 2.3% 2.5% 3.0% 2.9% 2.3% 11.1% 15.7% 18.5% 16.4% 11.4% 14.4% 19.9% 18.9% 12.9% 15.7% 18.9% 17.6% 12.0% 15.8% 18.3% 16.6% 11.9% 15.1% 18.7% 17.1% 11.5% 9.9% 9.2% 9.1% 8.4% 8.4% 8.3% 7.3% 1.2% 4.2% 10.5% 16.5% 18.7% 15.9% 10.7% 2.0% 5.9% 11.8% 15.9% 16.9% 14.0% 1.9% 5.3% 10.9% 16.8% 18.4% 14.3% 2.0% 5.7% 11.4% 16.6% 18.5% 15.0% 2.3% 6.2% 12.6% 17.1% 17.5% 13.2% 1.5% 4.8% 11.0% 16.8% 18.0% 13.5% 1.8% 5.6% 12.0% 17.1% 16.6% 12.3% 2.5% 7.0% 13.3% 17.5% 16.8% 12.0% Note: Totals may not add due to rounding Explanation of revised AWPFC data series At the December 2005 meeting, the national Committee made the decision to collate and review the key variables (shorn wool production, cut per head, number of sheep shorn) used in the committee from the available industry sources and to create a consistent historical data series at both a state and national level. This was required as some differences existed between industry accepted figures and the AWPFC data series and to ensure a consistent methodology over time. This process resulted in changes to the parameters `average cut per head' and the `number of sheep shorn' for some seasons at both a state and national level. Modus operandi for the AWI Production Forecasting Committee The AWI Wool Production Forecasting Committee draws together a range of objective data and qualitative information to produce consensus-based, authoritative forecasts four times a year for Australian wool production. The Committee has a two-level structure, with a National Committee considering information and advice from state sub-committees. It is funded by Australian Wool Innovation Limited, which also provides an independent representative in the role of the Chairman of the National Committee. Australian Wool Production Forecast Report August 2013 The National and state sub-committees comprise wool producers, wool brokers, exporters, processors, private treaty merchants, AWEX, AWTA, ABARE, ABS, MLA, DPI and The Woolmark Company. The Committee releases its forecasts in the forms of a press release and a report providing the detailed forecasts, historical data and commentary on the key drivers of the forecasts.