support is needed to boost Indonesia's cattle breeding capacity ... and operated wool companies. Its brokering ... mies
AGRIBUSINESS
STOCK JOURNAL ■ January 22, 2015
11 ALISHA FOGDEN |
[email protected] | @alishafogden
Market Watch
Deal struck Strategic buy Western Wool Marketing
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Trade Weighted Index 75.0 72.5
Quality Wool strengthens market hold
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In short Cattle quota cuts: Indonesia is cutting back on imports of live cattle from Australia early this year, announcing that it will release permits for 100,000 in the first quarter. That is about 33,000 fewer than shipments in the first quarter of 2014, but at this stage the smaller allocation is not bothering the northern cattle industry. Given solid monsoon rains across the NT, sourcing cattle from flooded stations will be an issue in coming weeks. NT Cattlemen’s Association chief executive Tracey Hayes said even when floods subsided, most exporting stations would be looking to consolidate after contributing to a near-record 600,000 turn-off to Indonesia in 2014. “People will be making most of the pasture growth and weight gain on their animals, and welcome the breathing space to do that,” she said. The reduction in import permits by Indonesia was expected, in light of the nationalistic sentiments expressed by President Jokowi’s new government. The Jakarta Post reports that the Indonesian Cattle Breeders Association is also among the bodies looking for reforms. The association is arguing before the Investment Co-ordinating Board that government support is needed to boost Indonesia’s cattle breeding capacity, and lessen reliance on live cattle imports. It wants a 5 per cent import tax on heifers eliminated, and streamlined import protocols.
Key Points ■ Buys NSW, Vic broker ■ Former subsidiary of Olam Australia ■ Economies of scale targeted would also pick up economies of scale at its Melbourne selling facility in testing and showfloor costs. The acquisition is expected to expand its staff by 20 to 30. “We have a really stable team of employees and the WWM team is stable too. We can put them together under the Quality Wool banner and have a really strong network to service our clients,” Mr Dyson said. He said while agriculture was embracing new technologies rapidly, interactions between brokers and clients were essential. On the wool market, Mr Dyson said a more balanced supply and demand equation was delivering much-needed price stability. “The commodity market for wool is strong, especially the carding market and crossbreds. Crossbred wool is as strong as it has been for a long time, if not history,” he said. “There is only the fine category which is struggling in recent years. Between 19 micron and 23M, there is only a 60 cents a kilogram gap, which reflects the market wanting those mid-micron ranges.” Emerging markets such as Vietnam, a low-cost processor, would reduce China’s dominance of the Australian market. WWM was owned by Qld Cotton, a wholly owned subsidiary of Olam Australia.
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FINE FIT: Quality Wool managing director Mark Dyson says the acquisition of Western Wool Marketing is a strategic fit with existing operations. The deal is expected to be completed later this month.
Behind the headline QUALITY Wool was established in 1991 and has grown from producing 6000 bales in its first year to becoming one of Australia’s largest, independent, family owned and operated wool companies. It started wool brokering in 1994. In 2011, it established Quality Livestock after buying the FarmWorks SA livestock division. This has grown into a thriving livestock trading business, selling to major abattoirs and weekly markets at Dublin and Mount Compass.
Olam Australia operates an integrated supply chain for five key products – cotton, almonds, pulses, grains and dairy – delivering these to more than 500 customers worldwide. Olam Australia Executive Director and Country Head, Bob Dall’Alba, said the sale was in line with the company’s global strategy to pursue growth opportunities and exit non-core operations.
“Olam has been a keen participant within the Australian wool industry. However, given Olam’s strategy to optimise our natural fibres business, and the fact that Olam’s wool business has been a niche operation restricted to Australia, we decided to exit the business with the sale of WWM to achieve the best strategic and economic outcome for our company,” he said.
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HE business of SA-based wool broker, private buyer and exporter Quality Wool has leap-frogged by more than 40 per cent with its acquisition of NSW, Vic and Qld wool broker Western Wool Marketing. The deal is expected to be completed later this month, subject to customary conditions. It will affirm Quality Wool as one of Australia’s largest, independent, family owned and operated wool companies. Its brokering and private buying business is set to grow by about 55,000 bales to 135,000-140,000 bales, giving it a 10pc market share on the eastern seaboard. Quality Wool managing director Mark Dyson said the buy was a strategic fit with its existing operations, extending its network in Vic, NSW and as far afield as Longreach in Qld. “While we are both in the brokering industry we don’t compete at the farm gate,” he said. “WWM are based in western and eastern Vic whereas we were already in Geelong, Bendigo and Benalla. We also have always been strong in the pastoral areas of NSW but they are mainly based in central and northern NSW.” Quality Wool has company owned stores at Port Adelaide, Naracoorte and Jamestown, as well as Geelong, Bendigo, Ballarat and Benalla in Vic. It will add WWM stores at Parkes, Wagga and Orange in NSW and Vic stores at Horsham, Edenhope and Yarram. Mr Dyson said Quality Wool
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