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How Are Australian Wool Markets Moving?

02 July 2015

AUSTRALIA – Australia’s wool markets have taken differing turns recently, with oversupply dampening record auction prices and forward markets seeing “very healthy levels” of sale.

The Eastern Market Indicator closed the season over 24 per cent higher than last year but prices have been dampened by a rise in offerings.

Australian Wool Innovation (AWI) said in a recent report that volume increased by 38 and 21 per cent in the last two weeks.

This forced the EMI down four per cent on the week, although an otherwise bumper year saw average returns three per cent above last year’s average at 1099 per clean kilo for the season.

Growth in wool markets is expected in both the US and Europe by Goldman Sachs. A “generally positive” outlook for India and easing fiscal and monetary policy in China are forecast.

AWI analysts say “large and unexpected” auction volumes have been traded recently.

AWI said: “In real terms this meant the trade had to suddenly find the capital to fund a potential A$33 million more in auction purchasing at the time of year where finances are usually being settled.

“Not surprisingly, the pass in rates went from just 1 per cent for the week ending the 5 June to 17 per cent four weeks later.”

Summarising the increase in forward trade, AWI said vendors are looking to lock in record highs. Contracts have been booked out as far as December 2016.

“Elder’s Southern Zone Wool Manager Lachlan Brown reports that traded volume on the forward market has lifted enormously,” said AWI.

“Despite the recent softening in auction wool prices, forward prices have not decreased to the same degree. Interest remains from both the sell side (woolgrowers) and buy side (exporters/processors) as all industry participants attempt to manage the likely medium term wool price volatility.”

Michael Priestley

Michael Priestley
News Team - Editor

Mainly production and market stories on ruminants sector. Works closely with sustainability consultants at FAI Farms.