MEDIUM micron woolgrowers are being urged to make the best of the strong market after prices seem set to stay above the 1400 cents a kilogram mark.
The increased prices have raised spirits, further bolstered by news that a possible supply shortage may mean prices soar even further.
Australia’s 21-micron wool clip has failed to crack the 1400c/kg price ceiling five times this year, but analysts suggest it has finally entered a breakout rally.
While the market broke the boundary in early April, which was corrected by a strengthened Australian dollar, it has attempted to clear the hurdle on five other occasions since January.
The Australian Wool Exchange (AWEX) current market indicator for 21-micron wool sits at 1401c - placing medium micron prices above the 97 percentile for the past decade.
“It is critical as in which direction it goes from here because a lot of trend analysts see (1400c) as a possible resistance level,” AWEX senior market analyst Lionel Plunkett said.
Odds on cracking this resistance level are optimistic, with the Australian dollar trading at the lowest level since early March, at USD73c on Monday.
While the market has been subject to volatility in the United States Exchange Rate, which has fallen by 4.77c over the last three sales, the AWEX Eastern Market Indicator closed last week 19c higher in Australian currency at sales in Sydney, Melbourne and Fremantle.
Rodwells wool manager Michael de Kleuver said while the current market faced similar conditions to that of the record-setting market of last June, the low reserves in storage could see the market surge to new heights.
“We’ve said to clients, if you have wool to sell, to take advantage of this very, very strong market and to identify opportunities to forward sell for the spring,” he said.
This optimism in the wool market was captured on our front cover by Susan White, Lilydale, Victoria, where four-year-old Dusty Plum plays in wool while his parents, shearing contractors Quinten and Dianne Plum, “Box Yards”, Booligal, work in the shed at “Euragabar”, Booligal.
Mr de Kleuver said the price spike received at the closing of the 2015 financial year, when the EMI roared to 1373c/kg, flushed out a majority of wool stored on-farm and broker reserves.
“Last year we had a surge in prices late May and early June, and a surge in volume to go with it,” he said.
“This year the great unknown is if the market continues to rally, will we have the surge in volume?
“If demand is not matched by supply, you’ll see a much sharper increase in price.”