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Office workers tipped to help wool demand

Office workers could hold the key to a rise in both prices and demand for wool, according to a new Rabobank report

The Agribusiness Outlook 2022 report by agribank Rabobank has forecast improvements in the sector could be, at least in part, due to demand for woollen suits as workers around the world return to their offices following COVID-19 lockdowns and restrictions.

Rabobank agricultural analyst Dennis Voznesenski says October 2021 data shows imports of woollen suits are back to pre-pandemic levels in France, while USA figures are only 26 per cent below pre-pandemic levels.

He believes that while consumer confidence is waning in the major Chinese and American markets, the global demand for suits will have a major impact on the wool industry this year.

“The recovery in office-wear demand may see suit sales growth rise above general retail apparel in 2022,” he says. 

“Even if we see an interest rate-induced slowdown in the world economy this year, we expect the demand for wool from workers returning to offices and buying suits to be the more important variable for wool.”

Rabobank predicts a seven per cent rise in Australian wool prices compared to the 2021 average, tipping Australian wool’s Eastern Market Indicator to trade between $13.50 and $15 per kilo this year.

Voznenovski says the news is not all positive for the industry though, with the Chinese and American consumer confidence decline likely to continue.

“This is likely to continue this year, especially if economic conditions slow in the post-Covid-stimulus era,” he says.

“China’s retail apparel sales, denominated in yuan, also slowed to a mere 2.6 per cent above pre-pandemic levels in November.”

Australian wool exports rose 39 per cent from January to November 2021 when compared to the COVID-disrupted 2020, reaching a total of 317 million kilograms.

Australia’s export exposure to China rose from 83 to 84 per cent during this period, the report says, and there is tipped to be a small reduction in Australia’s reliance on the Chinese market.

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