Wool Market Reports

Covid-19 Wool Market Update

Written by CCWG Monday, April 27, 2020

COVID-19 WOOL MARKET UPDATE

The COVID-19 pandemic is having a major negative impact on the global wool market which has virtually come to a standstill. Numerous mills around the world are closed along with others involved in the wool supply chain. Most of the major wool producing countries with the exception of Australia have recently suspended wool auctions as steps are being taken to flatten the curve and control the virus on a worldwide basis. Global demand for raw wool was weak before Covid-19 restrictions were imposed for travel, social, and commerce. As a result wool trading conditions have continued to deteriorate or are non existent at the present time due to the high level of uncertainty that exists in the marketplace.

At CCWG we are still accepting wool at our branch and wool depot locations. Producers are encouraged to call ahead to book a wool delivery appointment. The Carleton Place wool grading facility continues to operate so that graded wool is ready for shipment when there is an opportunity to sell.  Wool will be accepted on a consignment basis only until further notice.  Initial payments will not be available at this time until there is some stability in the marketplace and we have a clearer picture on sale prospects and market values. Additional information and updates can be found on www.wool.ca and the company Facebook pages at all branch locations.

  1.  Covid-19 update for on farm service providers https://wool.ca/page/shearers  https://wool.ca/page/wool-depots
  2. CCWG and Coronavirus – update https://wool.ca/blog/category/company-news

Our best wishes to everyone, please stay healthy and safe.

Thank you,
Eric Bjergso
General Manager

Canadian Co-operative Wool Growers Limited  WWW.WOOL.CA

CCWG Livestock Supplies – Carleton Place
https://wool.ca/page/shop-our-online-stores 
https://www.facebook.com/ccwgcarletonplace

Premier Choix Agricole - CCWG Livestock Supplies – Saint Hyacinthe
https://www.premier-choix.ca
https://www.facebook.com/premierchoixagricole

CCWG Livestock Supplies – Cookstown
https://www.facebook.com/CCWGCookstown

CCWG Livestock Supplies – Lethbridge
https://www.facebook.com/CCWGLethbridge

The Real Wool Shop
https://realwoolshop.ca
https://www.facebook.com/RealWoolShop


CCWG Wool Market and Business Update – Fall 2019

Written by CCWG Friday, November 15, 2019

CCWG Wool Market and Business Update – Fall 2019

2018 / 19 Wool Market Update

The wool market has been experiencing quite a rough ride for the current wool marketing year.  During the first quarter the market seemed to be on track for stable conditions with both fine wool and crossbred types achieving reasonable prices and demand.  There were expectations at the time that good progress was being made for a new China / USA trade agreement.

This situation however was short lived from April onwards as a number of factors came into play.  Traditionally the market for wool is at its best and consumer confidence is greatest when there is positive growth in global economies and a stable worldwide political environment.  The current situation of widespread indecision and uncertainty has had a detrimental effect on all value chain partners within the entire wool textile industry.  China is the world’s largest market for woolen garments of which approximately 45% is for domestic consumption and the remaining 55% for export.  The escalation of the China / USA trade conflict, with time lines for increased tariff’s put in place by both sides has had a major negative impact on the market.

Wool prices have been quite volatile which has created chaotic conditions for mills and the consequences of de-valued inventories.  In August the Australian market dropped by more than 35%, the market has since managed to claw back some of these losses in September and October.  For several months mills in China have been operating on reduced production schedules from 30% to 60%.   Due to weak demand, stocks throughout the entire wool textile pipeline have been building in China and around the globe.  Cash flow has been very much restricted as a result.   European processors have reported that consumer demand has dropped by more than 20 percent, again due to trade and economic uncertainty from the trade war and other problems such as Brexit and tensions in the Middle East.  Due to the overall state of the global economic situation, consumers are spending less on clothing which is affecting the entire global textile sector.  Consumer confidence throughout China, Europe and other major economies has been severely affected by trade and fears of a worldwide recession.  

Most of the major wool producing countries have experienced declines in wool exports of approximately 10% to 15% compared to a year ago which is mostly attributable to weaker global demand for wool.  In Australia there has been no relief in the severe drought conditions that have existed for quite some time.  Wool production has been hit hard due to these difficult seasonal conditions as producers have been forced to de-stock due to feed shortages.  Wool production in Australia has declined by 14% compared to a year ago and there has been a downward trend now for several years.  In NZ sheep numbers also continue to decline and wool production is lower by 2.5% compared to a year ago.

The Nanjing Wool Market Conference was recently held in Qufu, Shandong China where 500 representatives from 26 countries attended.  The conference is an annual meeting of the global wool industry that facilitates discussion on current industry issues, future developments and market opportunities.  The general consensus at the conference was that wool prices are likely to remain volatile for the next few months and possibly into 2020 before a more sustained and modest improvement will occur.  A bright spot for the Chinese industry has been the popularity of two new star products that utilize significant fine wool and some broader wools to a lesser degree.  Double sided wool fabric and fake faux fur (replicating wool for fur) for winter coats have been selling very well in the Chinese domestic market, examples are attached to this report.

In terms of Canadian wool production, a 9.7% increase was recorded compared to the previous wool marketing year.  This is a good sign and we are hopeful for stable wool production in Canada.  However, continuing drought conditions in certain parts of the country is a big concern due to the associated increased feed costs and flock reductions or dispersals that have been occurring.  At the time of this writing we have marketed approximately 60% of the current year’s wool production.  Under normal trading conditions we would expect to be further sold by this time of year.  With the present difficult wool marketing conditions that prevail we will continue with a patient and disciplined wool marketing approach to our regular established markets as opportunities arise.  Our top three export destinations for Canadian wool in 2019 will be China, Egypt and Czech Republic.

It is worth noting that the well prepared wool clips are always easier to market when times are tough compared to inferior quality wools that contain faults such as high vegetable matter, poor colour etc.

CCWG Livestock Supplies, the Real Wool Shop and Premier Choix Agricole represent the retail brands that have served the company well.  This business continues to grow and achieve favourable results.  Sales increased by 6.7% compared to the previous year and net profitability increased by 9.7%.  Significant investment is being allocated to improving the companies online platform as this part of our business continues to expand.  In order to maximize social media marketing opportunities and for future business planning and development, a marketing consultant will be providing recommendations for consideration on these initiatives.

We wish to recognize James McNeely, Wool Superintendent and Donna Zeman, Executive Director who are two long time company employee’s that are taking well deserved retirement.  On behalf of all of us we thank you for your many years of loyal and dedicated service.  Best wishes to both of you for many years of happy retirement.

Sincere thanks is also expressed to all staff, directors and our loyal customers for contributing to our continued success in this our 101st year of business.

Respectfully submitted,

Eric Bjergso

General Manager

 

 

Mise à jour d’affaires et du marché de la laine de la CCWG – automne 2019

Mise à jour du marché de la laine 2018-19

Le marché de la laine a connu une période assez difficile lors de la campagne actuelle de commercialisation de la laine. Au cours du premier trimestre, le marché semblait être sur la bonne voie afin de maintenir des conditions stables pour la laine fine ainsi que la laine grossière, lesquels atteignaient des prix et une demande raisonnables. À ce moment, on s’attendait à de bons progrès pour un nouvel accord commercial entre la Chine et les États-Unis.

Cette situation a toutefois été de courte durée, à compté d’avril, un certain nombre de facteurs sont entrés en jeu. Traditionnellement, le marché de la laine est à son meilleur et la confiance des consommateurs est la plus grande lorsqu’il y a une croissance positive dans les économies mondiales et un environnement politique mondial stable. La situation actuelle d’indécision et d’incertitude a eu un effet néfaste sur tous les partenaires dans l’ensemble de l’industrie de la laine. La Chine est le plus grand consommateur mondial pour les vêtements en laine. Environ 45 % sont destinés à la consommation à l’intérieure du pays, tandis que 55 % sont destinés à l’exportation. L’escalade du conflit commercial entre la Chine et les États-Unis, avec les délais et l’augmentation des droits de douanes mis en place par les deux parties, a eu un impact négatif majeur sur le marché.

Les prix de la laine ont été assez instables, ce qui a créé des conditions chaotiques pour les moulins et a entrainé une dépréciation de la valeur des inventaires de laine. En aout, le marché australien a chuté de plus de 35 %. Le marché a réussi à récupérer une partie de ces pertes en septembre et en octobre. Depuis plusieurs mois, les usines chinoises ont réduit leurs productions de 30 à 60 %. En raison de la faible demande de laine, les inventaires se sont accumulés dans l’ensemble du réseau des textiles en Chine et à travers le monde entier. Par conséquent, les flux de trésorerie ont été très limités. Les transformateurs européens ont signalé que la demande des consommateurs a chuté de plus de 20 %, encore une fois en raison de l’incertitude commerciale et économique découlant de la guerre commerciale et d’autres problèmes comme le Brexit et les tensions au Moyen-Orient. En raison de l’état général de la situation économique mondiale, les consommateurs dépensent moins sur l’habillement, ce qui affecte l’ensemble du secteur mondial des textiles.  La confiance des consommateurs en Chine, en Europe et dans les autres grandes économies, a été gravement affectée par le commerce et les craintes d’une récession mondiale.

La plupart des principaux pays producteurs de laine ont connu des baisses d’exportations de laine d’environ 10 à 15 % par rapport à l’an dernier, ce qui est principalement attribuable à la baisse de la demande mondiale de la laine. En Australie, il n’y a eu aucun répit des conditions sévères de sécheresse qui persistent depuis un bon bout de temps. La production de laine a été durement touchée en raison de ces conditions saisonnières difficiles; les producteurs ont été forcés de diminuer leurs cheptels en raison de la pénurie d’aliments pour les animaux. La production de laine en Australie a diminué de 14 % par rapport à l’an dernier. Cette tendance à la baisse ce produit depuis plusieurs années. En Nouvelle Zélande, le cheptel ovin continu également à diminuer et la production de laine est de 2,5 % inférieur à l’année précédente.

La conférence du marché de la laine de Nanjing a récemment eu lieu à Qufu, Shandong, en Chine, où 500 représentants de 26 pays ont participé. La conférence est une réunion annuelle de l’industrie mondiale de la laine qui facilite la discussion sur les enjeux actuels de l’industrie, les développements futurs et les débouchées commerciaux. Le consensus général à la conférence a été que les prix de la laine sont susceptibles de rester instables pour les prochains mois et peut-être jusqu’en 2020 avant qu’une amélioration plus soutenue et modeste se produira. Un bon point pour l’industrie Chinoise a été la popularité de deux nouveaux produits vedettes qui utilisent beaucoup de laine fine et un peu de laine grossière. Du tissu de laine double face et de la fausse fourrure (réplication de laine pour de la fourrure) utilisés pour manteaux d’hiver se vendent très bien sur le marché intérieur chinois. Des exemples sont joints au présent rapport.

En ce qui concerne la production de la laine canadienne, une augmentation de 9,7 % a été enregistrée par rapport à l’année de commercialisation précédente. C’est un bon signe et nous espérons que la production de laine sera stable au Canada. Toutefois, les conditions de sécheresse persistantes dans certaines régions du pays sont très préoccupantes en raison de l’augmentation des coûts des fourrages et de la réduction ou de la dispersion des troupeaux. Au moment de la rédaction de ce document, nous avons commercialisé environ 60 % de la production de laine de l’année en cours. Dans des conditions commerciales normales, on aurait vendu d’avantage à cette période de l’année. Compte tenu des conditions actuelles difficiles de commercialisation de la laine qui prévalent, nous continuerons d’adopter une approche patiente et disciplinée de commercialisation de la laine sur nos marchés établis au fur et à mesure que des occasions se présenteront. Les trois principales destinations de la laine canadienne en 2019 seront la Chine, l’Égypte et la République de Tchèque. Il est bon de noter que les toisons de laine bien préparées sont toujours plus faciles à commercialiser lors de moments plus difficiles par rapport aux laines de qualité inférieure qui contiennent beaucoup de matière végétale, une couleur foncée, etc.

La CCWG Livestock Supplies, the Real Wool Shop et Premier Choix Agricole représentent les marques de detail qui ont bien servi l’entreprise. Cette entreprise continu de croître et d’obtenir des résultats favorables. Les ventes ont augmenté de 6,7 % par rapport à l’année précédente et la rentabilité nette a augmenté de 9,7 %.  Des investissements importants sont consacrés à l’amélioration du site Web en ligne car cette section de nos activités continue de prendre de l’expansion. Afin de maximiser les occasions de marketing dans les médias sociaux et pour la planification et le développement des activités futures, un conseiller en marketing formulera des recommandations à l’égard de ces initiatives.

Nous tenons à rendre hommage à James McNeely, surintendant de la laine, et à Donna Zeman, directrice exécutive, qui sont deux employés de longue date de l’entreprise qui prennent leur retraite bien méritée. Au nom de tous, nous vous remercions pour vos nombreuses années de services, votre loyauté et votre dévouement. Meilleurs souhaits à tous les deux pour de joyeuses années de retraite.

Des remerciements sincères sont également adressés à tout le personnel, aux directeurs et à nos clients fidèles pour avoir contribué à notre succès continu en cette 101e année d’affaires.

Respectueusement soumis,

Eric Bjergso
Directeur général

 

Download PDF file


CCWG Wool Market and Business Update Fall 2018

Written by CCWG Monday, October 29, 2018

CCWG Wool Market and Business Update – Fall 2018
2017/18 Wool Market Update

Read full Market Report for 2018

In the last 12 months fine wools from all origins have achieved unprecedented record prices although at the time of this writing prices have pulled back for most microns in the last couple of weeks.  Unfortunately the crossbred and broader wools which are much more plentiful in supply have been left behind for the most part and have only recorded marginal increases compared to the previous year.

The growth in fine wool prices can be attributed to two main factors.  There is major concern regarding future available supply due mainly to ongoing Australian drought in most of the major wool producing states.  This has resulted in decreased production ie lower fleece weights due to feed shortages and reduced sheep numbers.  For the 2018/19 season it does not look any better with the current forecast of a 5.7% reduction in the Australian wool clip.

As always, China is playing a major role in influencing the market due to the significant growth of their middle class and upper income earners.  Despite rising prices, consumer demand for wool apparel has continued to grow.  It was only ten years ago when China was mainly a low cost manufacturing and re-exporting destination for most of the wool exported to China.  Today more than half of China wool imports are manufactured into wool products that stay in China and are purchased by Chinese consumers.  Upwards of 70% of global wool production finds its way into this market.  These are the main reasons for the current strong performance of fine wools.  Most leading Chinese textile companies are reporting an increase in domestic sales but a decrease in exports.  This underlines the huge growth potential for domestic sales within China as incomes continue to rise.

In terms of sustainability the key message to encourage consumers to choose wool continues to be that we have a natural fiber, renewable and biodegradable resource. 

In addition to challenging global climatic conditions the current USA / China trade conflict cannot be underestimated.  This escalating trade war remains a key risk to global economic activity and to global textile markets because of the uncertainty it is creating.  It has the potential to completely disrupt the supply chain and to lower consumer confidence which up to this point in time has been very high in most of the major wool consuming countries.  The present situation is that American raw wool, hides etc are now subject to a Chinese duty of 25%.  China accounts for 53% of all USA imports of wool clothing.

Although we have developed markets for Canadian wool in six countries, China will be our major export destination in 2018 for all wool types.  It does not appear that the new USMCA agreement will have any impact on Canadian

wool exports to USA, greasy wool is still rated duty free the same as the previous NAFTA agreement.  Our sales to USA will be lower this year because of the USA / China trade war, American mills have ample supply of wool that would otherwise be exported under normal wool trading conditions.

Our wool volume dropped approximately 4.3% during the 2017/18 wool marketing year but we are encouraged by recent Statistics Canada figures that indicate our sheep and lamb numbers have increased by 1.6% in 2018 compared to 2017, the first increase in 7 years.  However, the drought conditions experienced this year in several provinces has resulted in high feed prices that will likely result in some flock reductions or dispersals. 

The tough trading conditions for the broader wools in 2017/18 resulted in lower sales of almost 14.5% for Canadian wool compared to the previous fiscal year.  Conditions are somewhat improved during the current wool marketing season.  We have found much better selling opportunities compared to a year ago to our regular network of buyers and also some newly established customers.

Retail Business

The retail business of CCWG achieved better than projected results for the fiscal year ending February 28, 2018 and continues to grow.   Profitability was up at all locations with  overall sales increasing 9.2%  In terms of revenue ratio it is now almost 25% (wool) and 75% (retail).

2018 marks our 100th year in business which is a significant achievement.  Sincere appreciation is extended to all staff and directors for your efforts in helping CCWG reach this major milestone.  You are the company’s most valuable assets.  Of course we must recognize the support we receive from our loyal customers who are the reason we are still operating and growing the business today.  We are fully committed to building relationships with our customers based on the right product at the right price and delivered with exceptional customer service.

Best wishes to all for continued success.

Yours truly,
Eric Bjergso
General Manager

 

30th Nanjing Wool Market Conference and Wool Trade Fair 2018

Eric Bjergso, CCWG General Manager attended the 30th Nanjing Wool Market Conference and Wool Trade Fair on September 11th – 13th in Nanjing Jiangsu Province, China.
Over 500 delegates were registered from the Chinese and international wool trade.
Participants include growers, traders, primary processors, spinners, weavers and garment manufacturers. It provided an excellent opportunity for all international delegates to meet with China’s biggest wool buyers and processors, all in one place. Contracts were negotiated for 700,000 pounds of graded and objectively measured Canadian wool.

CCWG Wool Market and Business Update-2017

Written by CCWG Tuesday, January 2, 2018

CCWG Wool Market and Business Update – Fall 2017

During the 2016/17 wool marketing season there has been a very significant contrast comparing the fine and coarse wool markets. Fine wool has experienced solid global demand and record prices have been achieved for many wool types 22 micron and finer.  A number of factors can be attributed to this success including the positive international branding of Merino wool.  As well, new and innovative wool products such as double faced and fake fur fabrics being manufactured in China have created new consumers for wool and these products require significant quantities of fine wool to produce.  
The specifications for Chinese government uniforms including military, railway and postal etc have recently been changed to favour more fine wool content and huge quantities of wool are required for these contracts.  In China mills are currently focused on increasing productivity and product quality, they have also made significant capital investment in order to comply with new stringent government environmental regulations. 

The broader crossbred wool market has struggled the past 18 months and to this point in time has not been able to ride the coat tails of the rising fine wool market.  The main driver of price trends continues to be China, which in 2016/17 accounted for 63% of exports from the five major wool exporting countries.  Excess stocks of coarse wool products that had built up in China throughout the supply chain, from greasy wool through to finished fabric are slowly being consumed.  Current projections are a little more positive with predictions that demand and market prices for crossbred wool will soon start to improve.

The wool trade seems to be firmly committed to the need for further industry programs within the education, promotion and innovation fields.  The International Campaign for Wool is an excellent example of collaboration between all members of the supply chain including farmers, retailers, designers, manufacturers and consumers.  The objective of this organization is to promote the incredible benefits and versatility of wool which in turn supports many small businesses and farmers whose livelihoods depends on the wool industry.  The Dumfries House Wool Declaration is a 10 point declaration that has been developed whereby the global wool industry commits to protect the environment, to care about the welfare of sheep and to uphold the best possible practices in growing, trading, manufacturing and marketing wool fiber and its related textiles. 

In Canada our wool volume has slipped after many years of marginal growth, we hope that this is only a temporary situation.  This can be directly attributed to lower sheep numbers which may be mainly due to drought conditions and expensive feed in some provinces the previous year.  We continue our practice of orderly wool marketing throughout the year of our graded, value added, and objectively measured wool types.  Due to the recent weaker demand from China for coarser wool types we have reached out to develop new market opportunities for Canadian wool in Europe and the Middle East.  In addition to our wool sales in Canada, export destinations for Canadian wool currently include China, USA, Czech Republic, Egypt, Bulgaria and India.  Canadian wool enjoys an excellent reputation in these markets due to our consistent quality deliveries which is a credit to our wool grading staff.  Our Shareholder Wool Shipper Loyalty Reward Program (SWSLRP) continues again this year at the rate of 7 cents per pound to our shareholder / wool shipper consigners.  The annual dividend will be 7% for shareholders of record date December 31, 2016.

In September I again travelled to China along with Ontario Board member Gary Fox to participate in the Nanjing Wool Market Conference and International Trade Fair. Over 600 delegates participated which gave us an excellent opportunity to display Canadian Wool to the global wool trade.  Prior to the conference we travelled with our agent and visited numerous customers, successfully selling several containers of graded Canadian wool for prompt and forward shipment.

Retail Business

The retail division of CCWG continues to be a cornerstone of our business and now accounts for approximately 70% of our sales revenue.  It has been a good marriage between our wool and retail business since we began this diversification strategy a number of years ago.  Very positive results have enabled the company to record a profit that is ultimately used to grow our business and finance capital assets.  It is a testament to our staff ability and effort when you consider the highly competitive consumer market place that we operate within for both livestock supplies and clothing.  New product research and development along with improved website and ecommerce platforms are ongoing initiatives that we are committed to implementing.  In our livestock supplies division we currently face a situation whereby numerous pharmaceutical items are becoming restricted for veterinary only distribution.  This will be a challenge for our company to find replacement products and we will have to adapt to changing times.  I have no doubt that our management team are up to the task at hand and will find solutions to ensure our continued success.  The staff profit sharing plan that the company developed several years ago continues to achieve the desired results.  It instills a sense of ownership with our employees who can control their own destiny with the right effort and attitude.  Our objective has always been to create a positive working environment and to supply all the necessary tools so that success can be achieved with the appropriate performance.  Offering excellent customer service and going the extra mile is how we separate our business from the competition.  In any event, we are proving with this business model that everyone wins – our customers, the employee’s and the company.

Earlier today we celebrated the official grand opening of our new facility in Broxburn Business Park, Lethbridge County.  Our old property at 918-1st Avenue South in Lethbridge which has been sold had served us well since 1950, but the time was right to explore new opportunities.  We are really excited about growing our business in this new environment and our Lethbridge team is eager to get the job done at the earliest opportunity.  Expectations are high and we wish them every success.  

From a financial point of view we are pleased to report that the company has no debt on our balance sheet for any of the capital projects that have been undertaken and completed in recent years.  In addition to the Lethbridge project some of these include store renovations at Premier Choix Agricole, Real Wool Shop, CCWG Livestock Supplies and Equestrian Centre, and our satellite store at Kitchener/Waterloo.  A new storage warehouse was built at Carleton Place about five years to accommodate graded wool bales and our expanding Livestock Supplies business.  This has been achieved by making carefully calculated business decisions and adhering to a disciplined financial plan.  

Our sincere thanks again to all CCWG staff and directors for your efforts that are contributing to the success of our organization.  In 2018 we look forward to reaching a major milestone, 100 years in business and we thank our many loyal customers for their continued patronage.

Respectfully Submitted,

Eric Bjergso
General Manager