FUR WORLD REPORT

Wool Gains Strength as Supplies Tighten Up

Wool coats, with and without fur trim, have dominated better women's collections for the last couple of years and fall 2004 promises more of the same, with woolen topcoats for men also showing a rebirth of popularity.

Wool continues to fetch between $2.40 and $2.50 a pound, and those figures have made it quite attractive in the face of the runup in cotton prices. But ironically this new found fondness for wool comes at a time when supplies have dwindled on the international market.

The big 10 wool producers in order of importance are Australia, New Zealand, China, Uruguay, Commonwealth of Industrial States and Baltic States, South Africa, Argentine, the U.K., U.S.A. and Spain. Between them they produce 89% of the world's wool, but Australia is the principal source of fine wool for apparel, with China buying most of it as raw product.

With 46 million sheep, New Zealand is the number two producer, but its fleece goes mostly for interior home fabrics. China uses its own wool harvest to make not so classy knitteds for its domestic market and limited exports, while Uruguay, in fourth place is the sleeper.

Killer Drought

Australia is cycling out of its worst drought in more than 100 years, and two of its seven states, Queensland and New South Wales, remain severely impacted, so the quality of its fleece has diminished, with Its limited output of fine wools continuing to fetch high prices while the price of inferior grades dwindles correspondingly.

Devastating heat and lack of water have also reduced Australian flocks to a current total of 99.8 million head, down from a pre-season estimate of 117.5 million, and the wool yield per animal has fallen to 4.3 kilos.

In good times Australia stockpiles wool and draws upon it when times are bad, but because of the drought times have been so bad those reserves are now eliminated, and it takes a while to rebuild flocks.

Labeling requirements mandate the identification of fiber content in finished garments, but there is no requirement for identifying the source of the fabric, so in the age of globalization apparel identified as "100% Wool," could contain fibers from any of the big 10, even if it bears the coveted label "Made in Italy."

Uruguay Proves Point

Fourth place producer Uruguay is a case in point.

When wool prices drooped and lamb and mutton prices rose, like all wool producing countries, Uruguay killed off more of its flock. Where it once averaged 25 million head of sheep, it currently has between 12 and 15 million. In the five months from July 2003 to November, because of lower demand for wool and lower prices, exports from Uruguay and Argentine fell 55% compared to the same period of 2002.

As demand for wool has increased, Uruguay's highly aggressive mill, Agolan, which is a significant supplier to U.S. apparel makers, is buying fleece from neighboring Argentine to meet its global orders for the more than 2 million meters of good quality fabric it produces annually.

Twice a year Agolan brings Italian specialists to its mill to supervise important production runs.

"When you are making high quality woolen fabrics," said sales manager Omar Giorgi, who is a familiar figure in Seventh Avenue sourcing offices, "you may use ultra modern technology, but there is a significant element of craftsmanship. You have to make decisions along the way, based on a number of factors that only long experience identifies. That is why China produces only knits rather than quality fabrics in other categories. They do not yet have craftsmanship."

Shipping Out

Agolan fabrics go aboard ships in Montevideo and the cargo may be discharged in Central America for use in cut-and-sew plants making for U.S. labels. Agolan's greige goods are regularly unloaded at Italian ports, and still more fabric is off loaded at German ports for transportation overland to manufacturers of woolen apparel in the Ukraine, Belarus or elsewhere for the European, U.K. and U.S. markets. When a finely tailored garment winds up on a store hanger, there is nothing to identify the source of its wool, much the way an Italian leather sofa sold at a premium price in New York has no obligation to note the leather is Argentinian.

Russia and the former component countries of the USSR now known as Commonwealth of Independent States (CIS) produce a lot of wool and they consume a lot of woolen fabric. Estimates are that at their current rate of economic advancement, their woolen needs will more than double by 2020.

The other element of the global wool industry is the diversity of blends. A reading of the label in a costly Italian sweater may indicate it is wool and two or three other fibers ranging from cashmere to polyester or nylon. Agolan and other mills routinely make such blends.

Can the global woolen industry meet the current increased demand?

Probably. It depends on how high the demand soars and how long it lasts.

For further information contact: Fur World, Creative Marketing Plus, 19 West 21st Street, Suite 403, New York, NY 10010; Tal.: (212) 727-1210; Fax: (212) 727-1218; fharrow@creativemarketingplus.com.

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