Wool production in China gained moderately in 2005 despite relatively static sheep numbers, however fine wool production recorded a moderate decline in 2005.

From 1998 to 2001, China's fine wool industry experienced an extremely difficult period because of the hybrid breeding (crossing back) of fine-wool sheep with meat sheep, which led to a slump in the number of fine-wool sheep (<25 micron) in China and thus fine wool production. This trend finally stopped in 2002.

The trend away from fine wool sheep in China has seen the proportion of fine wool production versus total wool production fall, from 50% to 32.6% during the 15 year period from 1990 to 2005. The declining share of fine wool has been mainly driven by low wool to sheep meat price ratio.

This has been helped by growth in domestic consumption of red meat. On the other hand, wool prices had been at low levels (except for the 2002/03 season and the more recent price surge since 2006) for some time.

Looking forward, with the slow-down of hybrid breeding of fine-wool sheep with meat breeds, and higher wool prices since the beginning of 2006, China's fine wool sheep numbers are expected to build modestly.

This is within the context of overall sheep numbers in China forecast to be relatively static in 2007 and 2008, remaining below 175 million head.
 
Australian Wool Innovation Limited