The Textile Exchange has done an excellent job in selling RWS to the downstream section of the supply chain, with demand popping up in Australia both within the auction system and without. This article takes a broad look at the supply challenges facing the supply chain in procuring RWS accredited wool in Australia.
In addressing the Wool Connect 2021 on-line conference organised by The Schneider Group the CEO and founder of the Textile Exchange declared some 7 million sheep were accredited to the RWS quality scheme. Using The International Wool Textile Organisation (IWTO) country sheep numbers there are roughly 131 million sheep in South Africa, Australia, New Zealand, Argentina and Uruguay (the major southern hemisphere exporters) which implies some 5% of this flock is accredited to RWS. The proportion may be less if other countries are involved. Keep in mind RWS is an animal welfare scheme so it covers all types of sheep.
The supply (under supply) of RWS wool is a real issue at present for the supply chain when planning greasy wool purchases, from a perspective of pushing price premiums up or simply getting their hands on suitable wool. Note the word suitable, as wool being a natural fibre varies and this variation restricts the actual suitable volumes available.
Figure 1 is a schematic designed to show the issue at present for medium merino wool (medium because the average fibre diameter of the merino clip is 19 micron). In Figure 1 the proportion of the Australian merino clip in 2020-21 which was between 17.6 and 20.5 micron is shown (66%) using clean wool as the base. Now within the micron range the orders for RWS wool tend to focus on the better style and measured wool – typically fleece with a length in the range of 70 to 95 mm, as staple strength from 38 N/ktx upwards, vegetable fault under 1.9% and no subjective faults such as green wool or cott. About half of the wool fits into these specifications. At this stage some 1-2% of medium merino fleece is RWS accredited (Figure 1 uses 1.5%) which really cuts the volume down. As it stands at present in the Australian merino clip there is about 0.46% of the clip (drawn from the biggest merino micron categories) suitable for the better merino fleece RWS orders. It is a squeeze.
What does it mean?
RWS wool is topical along the supply chain as demand outstrips supply. The premiums seen at auction are a function of minimal supply. The question is whether supply can increase at a sufficient rate for demand.
Key Points
- The supply of RWS wool in the big bread and butter Australian merino microns categories is extremely limited.
- Overall it appears (subject to correction/confirmation) that around 5% of the sheep flock in the southern hemisphere major wool exporters is accredited to RWS.
- The limited supplies of RWS wool at auction are encouraging the supply chain to line of supply outside of auction presumably to both secure supply and reduce the risk of paying very high premiums at auction.
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Data sources: AWEX, IWTO, Wool Connect, ICS
