Recent spikes in demand for Merino ewes have translated into higher prices for replacement stock as producers take advantage of potential improvements in both wool prices and seasonal conditions, according to Rabobank branch manager Goulburn Michael White.

Speaking at the Great Southern Supreme Merino Show and Sale in Canberra this weekend, Mr White said the recent lift in wool prices was likely to be sustained at these comparatively higher levels in the short to medium term, according to a recently-released wool industry report from Rabobank.

"However, while prices have picked up from the three-year lows experienced in early 2009, the extent that this rise continues will be determined by the pace at which the world economy recovers and the level of competition from alternative fibres," he said.

Mr White said some short-term price fluctuations were also likely to occur. "For example, in the past week we’ve seen some softening in the high prices witnessed after the big jumps experienced in the opening weeks of the year," he said. "Looking ahead to Chinese New Year, which begins in mid February, we may also see softening of competition and prices correcting or moving sideways until China comes back into the market."

Mr White said some of the best Merino genetics in Australia were on display at the Great Southern Supreme Merino Show and Sale.

Rabobank, the world’s leading food and agribusiness bank, is a key sponsor of the event. The bank’s Goulburn branch is a regional office servicing all of South Eastern New South Wales and the ACT.

"The premium and niche market status of wool meant that wool was one of the hardest- hit agricultural commodities when the global credit crisis first started to emerge," the report said.

"As the recovery in the global economy gathers pace – although more gradual in developed economies – we expect that the desirable nature of woollen garments will remain, this should support an improving global demand outlook for wool."