1 July 2019

Wool market: EMI falls 51c/kg as 2018-19 season comes to close

- Share -

By Nicola Bell, The Weekly Times

WOOL prices have continued to plunge due to subdued demand and the effect of world economic issues.

In the final sale for the 2018-19 season, the Eastern Market Indicator fell 51c/kg to 1715c/kg last week — 341c/kg or 16 per cent lower than the same time last year.

However, the EMI recorded the highest season average on record of 1939c/kg — 200c/kg or 11.5 per cent higher than the average price of 1739c/kg in the 2017-18 season.

Across the Merino fleece categories last week prices fell about 4 per cent up to 19 mic­rons and about 3.5 per cent for broader microns.

Australian Wool Exporters and Processors executive director Peter Morgan said history shows any economic uncertainty affects the wool market.

“We’ve had increasing uncertainty with the trade war between the US and China, political tensions with the US and Iran, so what we are seeing isn’t unusual in these circumstances,” Dr Morgan said.

“One positive is Victoria has had a good start to the season, as has Western Australia, which is good for supply.”

Fox and Lillie Rural wool brokerage manager and wool technical manager, Eamon Timms, said it had been a “solid month of drops”.

“Demand is very patchy and I can’t see any compelling arguments for demand to improve in coming months,” Mr Timms said.

Mr Timms said the US-China trade war was impacting confidence levels for Chinese buyers, while Brexit was also an issue, the European economies were looking like they could go into recession and Italian buyers were starting to experience a slowdown in demand for fabric.

“The immediate short-term prospects are linked to significant overbearing factors, so unless we see Trump start to wind back Chinese tariffs, there is concern for a lack of growth in the Chinese economy,” he said.

With just over 34,500 bales on offer nationally this week, supply throughout the season has been a concern.

Australian Wool Innovation’s market report said the amount of wool sold through the auction system in 2018-19 fell by 296,326 bales year-on-year, a 16.6 per cent decline.

Mr Timms said the prediction of a 12 per cent drop in wool volume this year is “understated”.

“I think the amount of wool shorn earlier than normal is masking the true drop.”

An industry expert says there are uncertainties in the market with the US-China trade war impacting confidence levels for Chinese buyers, European economies looking like they could go into recession and Italian buyers starting to experience a slowdown in fabric demand.
Competitive, Proven, Trusted
Greasy Wool Greasy Wool