Given 2024 has been designated as the year of the camelids by the United Nations and a year has passed since the last article it seems a good time to check how alpaca prices have been going.
Mecardo last looked at alpaca prices in May 2023. A good primer on the alpaca supply chain is provided by the Textile Exchange (read here) which has set up the Responsible Alpaca Standard (RAS) (view here) to run alongside RWS and RMS (for wool and mohair respectively).
Drought in 2023 was an issue for Peruvian alpaca growers (read here), compounded by a small average flock (~100 animals). As some 80% of world alpaca production comes out of Peru and Bolivia, what happens to supply in these countries drives world supply.
Figure 1 updates a similar schematic shown last year, comparing baby alpaca (somewhere in the range of 16-18 micron) to cashmere, from 2009 onwards. The two series tend to follow each other, although cashmere has weakened slightly during the past year while the alpaca price has firmed. Production problems in Peru due to drought would explain such a divergence.
Figure 2 compares an adult alpaca price series with an Australian 16 micron merino price series. The micron of the adult alpaca is going to be much broader than 16 micron (more in line with Australian crossbred wool) but the two price series follow each other most of the time – with 2011 and the current market the notable exceptions. In the current market reduced production in Peru and ample production in Australia provide a reasonable explanation for some of the divergence in price.
Finally in Figure 3 a Peruvian Alpaca average price series (from 2018 onwards) is compared to the WTiN fine spinning alpaca top price series. This is comparing and average raw alpaca to early stage processed fine spinning alpaca so there should be a price difference due to varying fibre diameter and stage of processing, which there is. The Peruvian raw price varies in its ratio to the top price from 0.8 down to 0.4, averaging 0.58 for the past five years. The old rule of thumb for wool was that clean raw wool prices would track on average at 0.625 of the comparable tops price (or put the other way tops would be 1.6 times the raw wool price). It is a bit of stretch, but the average Peruvian alpaca price looks to be roughly in line with the fine spinning top price using this logic.
In addition, the deflated ten-year Australian dollar percentiles for alpaca tops prices are shown in Table 1, along with the current price level and rank. As Figure 3 shows an adjustment factor will be needed to bring the tops price into line with an average alpaca fleece price.
What does it mean?
Peru is the dominant producer of alpaca fibre, so what
happens there in regard to supply is important for alpaca prices. In comparison
to cashmere, alpaca prices have firmed during the past year, and in relation to
16-micron wool they have reversed a normal positive correlation which has
become highly negative. The relationship between average raw alpaca prices and
the quoted alpaca tops market varies quite widely, even if the average
relationship appears about right using old wool industry standards as a guide.
Key Points
- Alpaca prices are holding up well, having firmed through 2023 into 2024.
- Drought in Peru, the main producer of alpaca, is a likely factor in the firming prices
- This firming has seen runs counter to the general trend in apparel prices.
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Data sources: WTiN, RBA, AWEX, gob.pe, Textile Exchange, The Guardian, ICS, Mecardo
