Australian Sheepskin Market Rebounds on Wool Demand

A buoyant wool market is driving up the value of Australian sheep skins, reversing the dramatic downturn where worthless skins were dumped in landfill just 12 months ago.

The upward trend is being fuelled by a spike in merino wool prices and demand from Chinese buyers, who are purchasing more due to low supply.

Farmers just one year ago were forced to pay meat processors to dispose of the by-product, but now can expect some of the strongest prices seen in years.

Sheepskins are sheep hides that have been treated and preserved with the wool still attached, making them soft, insulating and widely used for things like rugs, boots and clothing.

Meat and Livestock Australia (MLA) senior market information analyst Emiliano Diaz said the turnaround was linked to increased demand for wool, which had reached seven-year highs.

While higher quality merino skins have been commanding the highest prices, crossbred skins have also increased, with values of up to $15, Mr Diaz said.

Wool surge lifts skin prices

Almost all demand for Australian sheepskins comes from China, with an oversupply of skins due to destocking largely to blame for the previously low prices.

"We are coming from a very high slaughter rate in the last three years, even a record for lamb, very high for mutton, so a lot of supply was coming into the market," Mr Diaz said.

Mr Diaz said reduced supply had resulted in higher wool prices, which had been the driver behind skin values increasing in the past 12 months.

Australian Hide, Skin and Leather Exporters Association vice president Luke Kivlighon said the change in prices was not a surprise.

"It always makes us happy, you don't want things going to landfill if there is a use and we can get a margin out of it.

"It's good to be able to give the farmer something back. It was a dreadful time when they were getting charged minuses for skins."

The industry's focus continues to be on international markets such as China and Türkiye, with little hope of demand from domestic buyers.

"Pretty well 90-plus per cent of our skins would go to China."

Good sign for wool growers

Wool producers and graziers have welcomed the dramatic turnaround in the skins market.

Merino breeder Richard Halliday, who operates Callowie Poll Merino near Bordertown in South Australia's south-east, said the skin market had been a "proverbial roller-coaster".

"We've been down to where short skins have had no commercial value," Mr Halliday said.

"You've got a 17 to 25 millimetre skin now is $30 to $40."

Mr Halliday hoped the product continued to be in demand and did not go to waste.

"Who doesn't love a nice pair of ugg boots or a really soft seat cover?" he said.