THE declining national sheep flock will affect the wool clip in 2010, however prices should continue their upward trend.
Landmark's Victorian wool manager Stephen Keys believes prices will continue to rise in the first half of next year, but a lot will ride on global demand and currency.
"There was a real lack of European activity in the market (at the end of 2009) and I don't see that changing in the first half of 2010," Mr Keys said.
He said China would continue to be an influence on Australia's wool prices.
"Of course, a lot will depend on the currency," he said.
Prices may have been 15 per cent dearer than last year but for most Australian wool producers 2009 was a very mixed bale.
AWEX's benchmark Eastern Market Indicator ended the year at 879c/kg clean - or 135c/kg up on the same time last year. But, last December wool prices were low, hit hard by the global financial crisis and an unsympathetic exchange rate.
Twelve months on, prices for the specialty superfines, favoured by the high-value European worsted or suiting market, have remained disappointingly low.
The 17-micron southern indicator closed down 3 per cent for the year at 1196c/kg clean, or 30 per cent below the 10-year average of 1707c/kg clean.
The 19-micron clips have fared better with an 8.5 per cent rise for the year, although, with their indicator at 1055c/kg clean or about 700c/kg greasy, producers of these clips still need help from the sheepmeat sector to remain viable.
The real stand-outs of the year have been the middle to broader micron clips.
The 21-micron indicator rose 20 per cent for the year to close at a 12-month high of 911c/kg, while the 23-micron indicator rose 16 per cent to a high of 856c/kg clean.
Reports from the exporters indicate the 19 to 23-micron market is being driven by the strong demand within China for wool apparel.
As for when the superfines can expect a lift, exporters and Australian Wool Innovation are counting on a revival in both European and North American demand. But the big unknown in this revival is the impact of the mulesing issue. Major European and North American retailers and brands insist that they will only be sourcing non-mulesed wool.
"It is one thing to have strong demand within China for wool apparel but if Australia wants a lift in the superfines it really needs to have the global retailers on side," WoolProducers president Don Hamblin said.
