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Wool Market Options
Consider All Your Marketing Options
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 Many times, producers believe that the only method they have to market
wool is on a cash basis. For some producers who don't manage their clip
and only think about marketing on the day they decide to sell it, this may
be the best method. However, for the producer who takes pride in what
he markets, he needs to consider all his marketing options before
deciding which is best for his operation. Consider these options: |
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Cash Sales |
| Cash sales provide the producer with the total amount of
money that he will receive for his wool clip at the time he agrees on
a price.
Advantages
 | Cash on the spot with no waiting. |
| Lower-quality clips are often purchased for more than they are worth. |
Disadvantages
| Cash prices reflect the average based on years of purchasing wool
and using blended prices knowing that some wools won't measure up
while others are better than expected. |
| Producers with quality clips, where the producer has done a good job
of managing his wool crop, may not realize the value of the clip
he could if he used another method. |
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Grade & Yield |
| Grade and yield sales are designed for producers with at least 200 pounds of wool, and are close enough to a warehouse that they can deliver it for grading. At the time of delivery, guaranteed prices are offered for the various grades of wool. The wool is then graded by a warehouse grader and the value of the clip is determined using the prices agreed upon by the producer at the time the wool was delivered
Advantages
| Wool is graded and prices paid reflect wool quality produced. |
| Grade reports are provided to the producer for use in evaluating what is actually being produced. All wool is not the same. |
| Producers receive all their money as soon as the wool is graded using agreed-upon prices. |
Disadvantages
| Settlement is not made until after the wool is graded (normally within a week of the time it arrives in the warehouse). |
| Prices are locked in, not providing any upward-movement potential in the market. |
| Producers not near a warehouse cannot use this option. |
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| Consignment |
| Consignment combines characteristics of both of the above systems and is designed for producers with 25 head or more. The wool is graded and marketed to the various mills. In December, the various sales are averaged for each of the grades of the wool and a final settlement check is sent to each producer based on the prices their grades of wool sold for. This is the true cooperative method of wool marketing that Mid-States was founded upon in 1918. Historically, this method provides the highest returns to the grower year in and year out. It eliminates risk for the cooperative and therefore allows a greater payment to the producer, which more closely reflects the value of the product being produced.
Advantages
| Wool is graded and the producers are paid for the quality they
produced. |
| Producers receive a complete report on what grades of wool were actually produced in the flock, allowing for management decisions on methods of improving the clip in future
years. |
| Premiums are paid to producers who market clips over 200#; these producers have worked to improve the quality of the wool through management. |
| Prices are determined over the entire year as opposed to any one single day. Prudent managers realize that marketing throughout the year will receive more return year in and year out than taking a spot price each year. This principle is used by grain farmers almost
exclusively. |
Disadvantages
| Final payment is made at the end of the year after all wool is sold. |
| If the wool market falls during the year, the price paid at settlement could be lower than the price offered in the cash option, but the price will never be the lowest paid price of the year. |
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| Consignment Premiums |
By forming a partnership with the cooperative, additional premiums may be paid for properly prepared clips from flocks of 25 ewes or more. Premiums may be paid to producers who take pride in their clip and allow the warehouse to evaluate the clip before the price is set. To receive a premium clip, the following criteria must be met:
| Wools have been taken care of throughout the year. They need to be free from chaff, burrs and mud. |
| Wools must be properly grown. They need to be 12-month staple wools with good strength and above-average color. |
| Producers had the sheep shorn in clean, dry conditions. Belly wool is pulled from the fleece and bagged separately. |
| Lamb wool, wool with black fiber and tags were bagged separately from the clear wool. |
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| Clean Price Core Test Grade &
Yield |
| Where individual clips are large enough to justify coring the main line, we offer a clean price based on the official core and micron results from Yocum McColl Testing Labs. Off sorts and smaller-volume grades will be graded and grouped with like wools at the warehouse to make a lot large enough to core and offer to mills. Based on the clean price and the core results, a grease price will be established and paid to the grower.
Advantages
| Large producers can select from a more uniform clip using the information from the core test. |
| Producers can develop a reputation for their clip from year to year, which adds confidence from the mill buyers. |
| Skirted and classed clips at the shearing pen receive a premium over unskirted BOU clips. Pride is
rewarded. |
Disadvantages
| Limited to large clips from a uniform group of ewes. |
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For more information on marketing options, contact the Mid-States warehouse nearest
you. |
