The merino wool that Chinese consumers are familiar with has caused the Oceanian herders to fall into a situation of one day

Summary:

For pastoralists breeding sheep in New Zealand, the past six months should have been a nightmare. They saw that a large amount of wool was cut off from their own sheep, but they had no sales. Between December 2016 and January 2017, New Zealand's wool exports decreased by 25%. Later in February and March, exports were reduced by another 10%.

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“We saw a rebound in demand two months ago, so we once thought there was hope for the entire industry,” said John Dawson, CEO of New Zealand Wool Services International, in an interview with the New Zealand Media New Zealand Radio. “But after that, The demand was completely dead."

Initially, New Zealand wool industry practitioners generally believed that the decline in wool exports was just one of the concrete manifestations of the country’s overall export decline caused by the Brexit and the strengthening of New Zealand currency after Trump was elected president of the United States. Until March 2016, Andrew Burtt, chief economist at Beef and Lamb New Zealand, was still expressing this opinion in an interview with the above media. However, at the time, Burtt also pointed out that in his view another factor affecting wool exports - the changes in the Chinese market.

According to the New Zealand Wool Services International Association, 60% of New Zealand's wool has been exported to China. However, since December of last year, this figure has obviously declined. To date, demand from the Chinese market has only accounted for 30% of New Zealand's total wool production.

This reason was established in Downson's view. “We went to China several times to hope to find the crux of the problem. Finally, we found that the Chinese fashion industry is changing. They now prefer softer, better wool.”

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If you see how the Australian pastoralists in neighboring countries have recently raised sheep and sheared wool, they will know that Downson's observations are accurate.

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Unlike 70% of wool produced in New Zealand, which is coarse wool, in Australia, most wool is soft Merino wool. This kind of wool has a higher selling price and has been a small supply of products for a long time in the past. This directly determines that only a small number of stable herders in Australia will join the ranks of raising sheep, and even if they have raised sheep, they do not need to have high shearing rates for sheep. Most people cut it once a year, and they are slightly more diligent. It's also a three-year cut.

However, a large number of new orders from China have made this originally quite calm market have a point of collapse. The situation that demand exceeds supply has caused Australian wool prices to rise to historical highs – a bundle of wool can now be sold for $3,000. A sheep farmer with 35 years of experience in an interview with the American Broadcasting Corporation's Agricultural Channel also said that now the entire industry is hot and unheard of in his lifetime.

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"We have 3,500 sheep now. Last year I only had 3,000. I think this number could rise to 4000 next year," he added.

At the same time, Australia's shearing industry has also ushered in a good time. Because in order to catch up with the high prices, many farmers will cut wool in advance and increase the frequency of shearing. According to the above-mentioned peasant households, many pastoralists have also begun to try a new model of cutting between the two crops. This gives the shearing workers more job opportunities.

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The boom in the wool market in Australia and New Zealand has witnessed the surge in consumption escalation in China. When we reported on the promotion of “Cool Wool” by the International Wool Bureau and six Chinese designers during the Shanghai Fashion Week in the spring/summer 2017 season, we also mentioned that in 2014, China had become the largest wool processing and consumer country in the world. However, most of the customers' demand for wool is still functionally oriented, mainly to keep warm. With brands such as Uniqlo increasingly emphasizing the characteristics of Merino wool and changing Chinese consumer perceptions, customer demand for wool has gradually advanced.

This is certainly not good news for the New Zealand wool industry. Now people in the industry have begun to seek change.

“There are certain restrictions on land use in New Zealand that make it very difficult for us to raise large numbers of sheep producing Merino wool,” Dawson said. “But you will still see that we have made some changes. We believe that The situation will be better by the end of the year."

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