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Beyond the Bale : September 2014
54 ON FARM AUSTRALIAN WOOL MARKET CONTINUES TO SHOW STRENGTH IN BROADER WOOL The chart opposite shows percentile in Australian dollar terms using four- year AWEX monthly Eastern Market Indicator (EMI) and a comparison against the previous decade (August 2000-July 2010). From May-July 2014, the monthly EMI averaged at $10.29, tracking at the 26th percentile. The low percentile value (26th) indicates that over the past four years, the monthly EMI recorded a price lower than $10.29 for only 26 per cent of the time. It also means within that period, the monthly EMI recorded a price higher than $10.29 for 74 per cent of the time. On the other hand, Merino Cardings (MC) averaged at $7.93, operating at the 78th percentile. For the same period, 18 micron averaged at a monthly value of $11.92 (19th percentile), 21 micron averaged at $11.45 (35th percentile), and 28 micron averaged at $6.74 (79th percentile). Although the EMI is tracking at the 26th percentile over the past four years, it is at the 94th percentile when compared to the first decade this century. MARKET INTELLIGENCE REPORT EMI $10.29 17um $12.44 18um $11.92 19um $11.61 20um $11.45 21um $11.45 22um $11.39 23um $11.42 24um* 25um $8.67 26um $8.11 28um $6.74 30um $6.39 32um $5.69 MC $7.93 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 26 18 19 19 30 35 41 53 40 57 79 84 84 78 94 30 64 74 96 97 97 98 89 90 94 99 97 100 2000-2010 decade 4 year historical data *Insufficient data LIFESTYLES OF HEALTH AND SUSTAINABILITY (LOHAS) CONSUMERS These consumers are no longer a fringe and marginalised group; the values are now entrenched in most consumers’ purchasing decisions. Wool is well placed to cater to the needs of these consumers. LOHAS stands for Lifestyles of Health and Sustainability. This term describes a type of consumer that actively seeks a healthier and more sustainable lifestyle. These consumers’ lifestyle and purchasing decisions are informed by their values concerning personal, family and community health, and environmental sustainability and social justice. Their values and attitudes are driving the markets for products such as renewable energy, low emission cars, ethically produced food and apparel. LOHAS consumers’ demand is changing the apparel and textile industry, pushing the industry towards a greener supply chain and greener garments. Asia is the world’s textile and clothing hub, and is the heart of many of the industry’s sustainability initiatives. Brands simply cannot afford not to care. Their reputation can be seriously damaged if a supplier is responsible for a pollution spill or industrial accident. Last year, several developments emerged that suggests the apparel and textile industry is continuing to move towards a more sustainable supply chain. Bangladesh – it might be no surprise that multiple green initiatives are under way in Bangladesh’s garment and textile sector. In October, Plummy Fashions will open a new knitwear-manufacturing unit. It will be equipped with light-emitting diode (LED) reducing energy costs by 50 per cent. The factory will also reduce water consumption by 70 per cent by harvesting rainwater. India – increased global demand for eco- friendly and ethical textiles is encouraging Indian manufacturers to seek global certifications such as the Global Organic Textile Standard (GOTS), Oeko-Tex, Fair Trade certification and others. China – home-grown green production initiatives are also emerging. One of China’s leading printing and dyeing companies is using bio-enzyme-based products. This improves clothing quality, reduces water usage and reduces workers’ exposure to toxins. The LOHAS market is growing, which is important for Merino wool as it is a source of new demand for our fibre. Recognising this growth, AWI commenced work in the LOHAS sector to position Merino wool as a high quality natural fibre that is functional, biodegradable, renewable, and gentle on the environment. There are three AWI programs working on creating new demand for Merino wool in this sector: Nurture by Nature, Urban, and Sports & Outdoors. These programs are aligned with the growth in LOHAS consumers and their view on ecologically sustainable garments. Historically, wool had little to no presence in these categories; it was mostly synthetics and cotton. Through working with leading designers, brands and consumer facing marketing activities, we now have numerous manufacturers, brand partners and retailers selling Merino garments. In this sector, wool is still faced with strong competition from synthetics and cotton. However, globally consumers are insisting on greater integrity and authenticity in the products they buy with an expectation that they are environmentally friendly. As a natural, biodegradable and renewable fibre, wool is well placed to take advantage of this growing consumer base. AVERAGE MONTHLY EMI FOR MAY -JULY 2014 RELATIVE TO 1. FOUR YEAR HISTORICAL DATA AND 2. THE DECADE 2000-2010