New Chinese tariffs could be leaving wool prices up in the air for time being

Chris Aiken, Pioneer Staff Writer

The price of clean wool reached a multi-year high this quarter, hovering near $5 per pound, even as Chinese tariffs threatened to punish U.S. commodity markets. 

According to the American Sheep Industry (ASI), prices could remain strong “in coming months or even years,” so long as “international demand continues to outpace a slow supply response.” 

April’s ASI magazine cites a Feb. 23 article from the Wall Street Journal, which said apparel companies like Adidas and UnderArmor were turning to wool products, emphasizing its softness and odor resistance. 

However, some in the sheep industry fear wool prices may be hurt by Chinese tariffs on other commodities such as pork, corn and soybeans. Wool itself could be added to list of targeted products. China, after all, is the world’s leading importer of raw, scoured and top wool.

“There are not a whole lot of places for wool to go,” said Marc King, director of the MSU extension office in Sweet Grass County. King contrasted today’s market of wool buyers to the one that existed 20 years ago, when he became the regional extension agent. 

“We used to send letters offering to sell the wool pool to 10 or 15 buyers,” King said. “Now there are one or two bidders” in a given year. 

In the last couple years, the pool brought roughly 60,000 pounds of clean wool to market, where it is purchased by distributing companies like Center of the Nation and Great Plains. 

Some years, the buyer ships it to mills in the U.S., to states like South Carolina, where it is scoured and carded. From there, the “top” wool goes to textile-producing countries like China. Other years, the wool has gone directly to China, King said. 

Kevin Halverson, President of the Montana Wool Growers Association, said wool is a small enough export that it may fly under the radar of Chinese trade officials. Indeed, according to the UN Food and Agriculture Organization, the U.S. exported 14,000 tons of wool in 2014, making it a minor player in the world market. By comparison, India — the world’s tenth largest exporter — shipped 46,500 tons in the same year. 

If China’s goal is to disgruntle President Trump’s political base — “to hurt the heartland,” as Halverson  contends — then it makes more sense to target staple crops like corn and soybeans, which the U.S. leads the world in producing. 

For now, Halverson is enjoying a bullish market, with prices “as high as we’ve ever seen.”