Australia produces about three quarters of the world Merino clip and combined with geographical isolation it is easy to overlook wool production in other countries. Be sure that the supply chain does not make this mistake. In a time of low Merino supply, there is a good argument to see other regions of production as allies. With this in mind this article takes a look at changes in the Uruguayan wool clip since the late 1990s.
Mecardo has previously looked at the South African wool clip in comparison to Australia and the makeup of the New Zealand woolclip (view NZ article here). Data for the micron makeup of the Uruguayan clip comes from Delta Animal Production Consultants Delta Animal Production Consultants, based in Uruguay, who survey the wool trade to establish wool production.
Figure 1 shows a breakup of the Uruguayan clip by micron categories, with the volume in millions of greasy kg for 1997 and 2019. In the late 1990s Corriedales dominated the Uruguayan clip with 26.6-28 micron wool the largest category followed by 28.1-29.5 micron the second largest category and daylight thereafter. Total production was around 80 million kilograms greasy.
Now look at the 2019 production estimate in Figure 1. Firstly overall production had fallen to 23.5 million greasy kg with the mid-microns of the Uruguayan clip suffering all of the loss in production. Volume on the broader edge of production (29.6 micron and broader) was stable while production rose on the finer side (less than 22.5 micron). From the late 1990s there have been a series of programs encouraging a move to finer wool production.
Figure 2 shows the change in production by micron category from 1997 to 2019 in Uruguay. 22.5 micron and finer volumes have risen by 134%. The mid-microns (22.6 through 29.5 micron) have fallen by 71% to 92%. This has been a major re-structure in the wool clip.
The change in the Uruguayan clip is reminiscent of change seen in the Australian clip (view article here). Keep in mind each clip started off with a different structure – the Uruguayan clip being appreciably broader than the Australian clip.
Figure 3 compares change between 1997 and 2019 in the Australian and Uruguayan clip using the Uruguayan micron categories. The Australian data does not line up perfectly with the Uruguayan micron categories but is good enough for this purpose. The drop in volume for 22.6 to 25 micron is well matched. The rise in the 22.5 micron and finer Uruguayan volumes is greater than the Australian change (which fell). Yet it matches the rise in the Australian 18 micron and finer volumes (which rose by 181% compared to the fine volume in Uruguay rising by 134%). Overall the Uruguayan clip shrank by 71% while the Australian clip shrank by 55%.
What does it mean?
Commodity prices are international in their nature where traded across country borders. Farmers will respond in a similar fashion to common price signals be they in NSW, Tasmania, Western Australia or Uruguay. When we consider wool production hence supply it would make sense to widen the net beyond Australian borders to include the other key wool production regions in the world such as Uruguay (about two thirds of the South Australian clip).
Key Points
- During the past two decades the Uruguayan clip has slashed it production of mid-micron wool (22.6 to 29.5 micron)
- At the same time it has boosted the supply of its finer micron categories by 134%.
- The changes seen in the Uruguayan clip are similar to changes seen in the Australian clip, demonstrating sheep farmers on different sides of the world responding to common international price signals.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: Delta Animal Production Consultants, AWTA, ICS, Mecardo.
