1. Global Wool Demand and
Supply Overview
Chris Wilcox
Chairman, Market Intelligence Committee
IWTO 2011 Congress, Hangzhou
9 May 2011

2. Agenda
• Price Trends
• Demand Drivers
– IWTO Wool Textile Survey
• Production and Supply
– IWTO Survey of Wool Production
• Prospects for 2011

3. World Wool Prices Since IWTO 2010
Congress in Paris
(% change April 2011 compared with April 2010)
64% US$
British MI
53% Local currency
99%
NZ Fine xbred 80%
54%
South Africa MI
40%
107%
Aust 18um
75%
80%
Aust EMI
52%
0% 20% 40% 60% 80% 100% 120%
% change
Source: AWEX, NZ Wool Services, Capewools, BWMB

4. Demand Fundamentals Positive
• Economic recovery and higher
consumer confidence in spite of high
unemployment
• Better retail sales in some markets
• Buoyant mood at fabric trade fairs
for Fall/Winter 2011
• Strong demand for “natural” fibres
• Increased orders and activity in wool
textile industry, notably in Europe
• Rising commodity prices
• Surging cotton prices
• Wool competitive with other fibres

5. Recovery in Economic Growth
% change y-o-y
7%
6%
5%
4%
3%
2%
1%
0%
f
f
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
19
19
20
20
20
20
20
20
20
20
20
20
20
20
20
Source: IMF, Consensus Forecasts (April 2011) and Poimena Analysis
Note: Economic growth in China, Japan, USA, UK, Germany, Italy, France and South
Korea, weighted by apparel wool consumption (from Woolmark/IWTO)

6. Better Consumer Confidence…
…but Faltering
Index = 100 US Balance of Responses EU
160 5
140 0
120 -5
100 -10
80 -15
60 -20
40 -25
20 -30
0 -35
1998 2000 2002 2004 2006 2008 2010 1998 2000 2002 2004 2006 2008 2010
Source: The US Conference Board and the European Commission
Data to April 2011

7. Rising World Food and Fibre Prices
Index: 2002-04=100
350
300 Food Meats Dairy
Cereals Cotton Wool
250
200
150
100
50
00
01
02
03
04
05
06
07
08
09
10
11
n-
n-
n-
n-
n-
n-
n-
n-
n-
n-
n-
n-
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Source: Food and Agriculture Organisation, AWEX and Cotton Outlook
Note: Nominal to March 2011

8. Clothing Retail Sales Recovering in
Major Consuming Countries
% change y-o-y
30%
2009 2010
20%
10%
0%
-10%
China USA UK Japan Germany*
Source: Government statistical bureaus. China is volume, other countries are value. Germany
is total retail sales.

9. IWTO Wool Textile Business Survey
Results
• Second year
• Shows sentiment rather than actual
• Industry production activity, orders and stock levels
– For 2010, Now and in Next Six Months
• Early stage processing, spinning, weaving, knitting,
garment making and interior textiles
• Responses from ten countries: China, Italy, India,
Germany, Japan, Brazil, Spain, Portugal, Turkey and
Uruguay
• Results weighted by wool usage

10. Wool Textile Business - Production Activity
Rating between 1 and 5
In 6 Months
Interior textiles
Now
Garment making
2010
Knitting 2009
Weaving
Spinning
Early Stage Proc
1 2 3 4 5
Very Poor Normal Good Very
Poor Good
Source: IWTO Wool Textile Business Survey; weighted results for China, Italy, Japan, India,
Germany, Brazil, Portugal, Spain, Turkey and Uruguay

11. Wool Textile Business - Stocks
Rating between 1 and 5
In 6 Months
Interior textiles
Now
Garment making
2010
Knitting 2009
Weaving
Spinning
Early Stage Proc
1 2 3 4 5
Well below Below Normal Above Well above
Normal Normal Normal Normal
Source: IWTO Wool Textile Business Survey; weighted results for China, Italy, Japan, India,
Germany, Brazil, Portugal, Spain, Turkey and Uruguay

12. Wool Textile Conditions
Key country results
China
– Full recovery in 2010 with increased sales in both domestic market and
export markets
– Exports to ASEAN countries up sharply following free trade agreement
– Still strong conditions, particularly at ESP and spinning, but moving
back to ‘normal’ in next 6 months
– Concerns about the high raw wool prices, access to labour, the
situation in export markets and tighter domestic macro-economic policy
Italy
– Very good to good activity levels in all sectors in 2010 except garment
making
– Now moving back towards ‘normal’ activity levels and orders, which is
expected to be maintained in the next six months
– Increased wool yarn and fabric exports, with worsted wool yarn exports
up by 21%

13. Wool Textile Conditions
Key country results
Germany
– Activity levels reported to be poor in 2010 in spinning and weaving, but
better in knitting, although orders were reported to be normal
– Activity levels have improved and are now good on the back of
improved orders
India
– Conditions have been normal throughout the past year and are
expected to remain at this level in the next six months
Spain
– Less optimism in Spain than in most other countries, with activity
levels and orders at ESP and spinning only at ‘normal’ in 2010, but
poor in weaving.
– Good activity levels and orders for ESP now and in the next six months,
but poor conditions and orders in spinning and weaving reported now
and in the next six months

14. Wool Textile Conditions
Key country results
Japan
– Activity levels and orders reported to be normal in 2010 in all sectors,
an improvement on 2009
– There has been an improvement in the first four months of 2011, with
activity levels and orders reported to be good.
– Consumer confidence hit by the earthquake, tsunami and nuclear crisis.
This plus the high wool prices likely to see a mild slow down from the
strong demand in the second half of 2011.
– Strong fashion trend to wool for autumn/winter 2011 and trading up by
retailers will moderate the slow-down.
Portugal
– Most pessimistic results of all countries, probably due to the sovereign
debt crisis in Portugal
– Activity and order levels poor for all sectors except for spinning and
ESP, which is rated as normal but this is expected to drop to poor

15. Wool Textile Conditions
Key country results
Brazil
– Activity levels reported to be good to very good in ESP, spinning and
interior textiles in 2010 but only normal in weaving, knitting and
garment making
– Conditions generally better now in all sectors, in particular in ESP which
is rated as very good with very low stocks. A moderate weakening is
expected in the next six months.
Turkey
– Conditions were good to very good across all sectors in 2010, remain
that way now and not expected to weaken much. Stocks are very low
in ESP.
– In spite of the good conditions, the industry is contracting, with high
raw material prices (wool and synthetics) the most significant
challenge.

16. Wool Textile Conditions
Key country results
Uruguay
– The ESP sector is the most significant, with other sectors much smaller
– Activity levels and orders were good in ESP and almost all other sectors
in 2010, while stocks were below normal throughout the year
– Current activity and order levels in ESP are very good and this
expected to be maintained in the next six months.
– One sector that is seeing poor conditions is garment making

17. Wool Imports by Major Processing
Countries
(Season July to February)
+3%
450
400
350 2009 2010
mkg greasy equiv.
300
-8%
250
200
150
100 +9%
-1% +49% +15%
50 +33% +92%
0
y
na
er
a
ly
l
ic
pe
ta
an
di
Ita
bl
th
hi
To
ro
In
m
u
O
C
Eu
ep
er
G
R
er
ch
th
O
ze
C
Note: From the five major exporting countries (Australia, New Zealand, Argentina,
Uruguay and South Africa)
Source: Australian Bureau of Statistics, FLA, SUL, Capewools, NZ Meat and Wool

18. Wool Remains Competitive
US$ terms
Ratio Synthetics Ratio Cotton
8 8
7 7
6 6
5 5
4 4
3 3
2 2
1 1
0 0
00
02
04
06
08
10
00
02
04
06
08
10
n-
n-
n-
n-
n-
n-
n-
n-
n-
n-
n-
n-
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Source: AWEX, Cotton Outlook, PCI Fibres, CIRFS, Woolmark, Poimena Analysis
Data to April 2011

19. World Production of Wool
• Long-term decline in world 2010
production almost halted in 2010 400 Total 1,094 mkg clean
– Total production down just 0.4% 350
– Lower production in Australia,
China, Uruguay, UK and USA 300
– Production up in New Zealand, 250
South Africa and Brazil
200
• Apparel wool production down 2%
150
• Interior textile wool production up
2% 100
• Reports from nine countries – 50
Argentina, Australia, Brazil, China,
India, New Zealand, South Africa, 0
Uruguay, USA and United Kingdom
a
er
Z
St u
C s
Af
na
az
SA
K
g
r
di
Au
N
Ar
U
th
U
Br
hi
h
In
U
O
Source: IWTO Market Information report, country statistical bureaus and IWTO member country reports

20. Wool Production
Key country results
Australia
– Small decline in production expected in 2010/11, followed by a small
increase forecast for 2011/12 due to slightly higher sheep numbers
– Balance between high wool prices and high lamb prices
– Very good seasonal conditions in eastern Australia but drought in Western
Australia
– Micron profile has broadened due to good seasonal conditions and shift to
dual-purpose sheep
– A$ at record levels against US$
Argentina
– Drought in some areas mean that production will be around the same in
2010/11 as in previous season in spite of better season in Patagonia
– Increased production of apparel wool, with 57% finer than 25 micron
– Exports in 2010/11 down 4% year on year to March, with exports to Italy
and Germany increasing strongly but exports to China well down

21. Wool Production
Key country results
New Zealand
– Total production forecast to increase by 2% in 2010/11 after a 15%
increase in 2009/10 due to increased cut per head and sheep numbers
– Production in 2011/12 forecast to decline by 5% due to lower cut per
head, although sheep numbers up slightly
– Increased exports due to increased production plus sales from stocks
Uruguay
– Sheep numbers at the start of 2010/11 were 11% lower
– In spite of higher fleece weights, wool production expected to be down by
2% this season
– High wool and sheep prices are encouraging a rebuilding of the sheep
flock, with lower slaughterings recently and increased demand for rams
– Total production in 2011/12 expected to be about the same as this season
– Exports in 2010/11 up strongly, with strong growth in exports to Western
Europe offsetting weaker exports to China

22. Wool Production
Key country results
South Africa
– Total production forecast to be slightly lower in 2010/11 after a the modest
rise in 2009/10 due to drought in some regions. Production expected to be
slightly higher in 2011/12
– Very good prices for both wool and sheep are encouraging for growers
– Wool exports to Western Europe up strongly, with declines in exports to India
and China
– Animal health concerns have been a challenge for exports in recent months
China
– After declines in previous years, wool production has stabilised in the past two
years
– High prices will encourage state-owned enterprises to lift wool production but
most household farms are focused on meat sheep
– Overall production is likely to be maintained at current levels in 2011/12

23. Wool Production
Key country results
United Kingdom
– Marginal increase in UK wool production
– UK wool prices hit the highest level in 25 years due to a number of
reasons
– But, wool production unlikely to change much from levels seen in 2010 as
growers respond to lamb prices, not wool prices
– UK lamb prices soared in 2011 due to lower competition from NZ and
other countries
USA
– A 1% decline in wool production expected in 2010 due to lower sheep
numbers and a further decline in 2011 and 2012 is expected
– High prices for wool and lamb will encourage increased production, but
not for a couple of years as sheep inventories are rebuilt
– Exports lifted in 2010, with China the major export destination

24. Wool Exports by Major Exporters
Recover
(full 2009/10 season and 2010/11 season to February)
% change yr-on-yr
30% 28% 27%
21%
20%
14%
8%
10% 7%
3% 3%
0%
-5% -3% -4%
-10%
2009/10
-20% 2010/11
-30% -27%
Australia New Argentina South Africa Uruguay Total
Zealand
Source: Australian Bureau of Statistics, FLA, SUL, Capewools, NZ Meat and Wool

25. Global Wool Supply Remains Low
mkg clean
3,000
2,800
2,600
2,400 forecast
2,200
2,000
1,800
1,600
1,400
1,200
1,000
800
2012f
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010e
Source: The Woolmark Company, Poimena Analysis.

26. Prospects for 2011
• Continued economic
recovery in key countries
• Increased demand for wool
clothing
• Buoyant mood at textile
Have wool
fairs for 2011 fall/winter prices
• Wool competitive with peaked?
cotton
• Increased orders to wool
textile industry
• Low wool production levels
and low stocks
• Wool prices historically
high in US$

27. Factors to Watch in 2011
• Government debt in Europe and the
US
• Inflation and macro-economic policy
• Oil prices and effect on economic
recovery
• Sustainability of high cotton prices
• Impact of higher textile fibre prices
on retail prices
• Changing flock structure in response
to high sheepmeat prices