Demand for fibres is expected to strengthen over the next few years as the world economy grows, but competition among the various fibres will remain intense in terms of price and technical innovation. Wool prices in real terms are projected to rise modestly in response to stronger demand and a reduction in wool availability. Australian producers are expected to continue adjusting their enterprise mix away from sheep and wool in favor of cropping, although the rate of change is expected to slow as the difference in relative returns narrows. Cotton prices are projected to increase over the medium term, as consumption increases faster than production and world stocks fall.
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