Wool market stability seems a long way off

Wool market stability seems a long way off

Sheep
Wool prices fell across all types, with 17-micron and 18-micron wool being the hardest hit.

Wool prices fell across all types, with 17-micron and 18-micron wool being the hardest hit.

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With global markets facing what can only be described as a meltdown, the Eastern Market Indicator appeared to hold its ground well.

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With global markets facing what can only be described as a meltdown, the Eastern Market Indicator appeared to hold its ground well, dropping ''only'' 5.5 per cent.

However, with the Australian dollar dropping rapidly against foreign currencies, the real story is revealed when looking at the EMI in US dollar terms. This shows a drop of 18.4pc to finish the week at US801 cents a kilogram or 1438c/kg in Australian dollar terms.

As expected, when markets are in turmoil, investors rush to the perceived safety zones of gold and the US dollar.

Prices fell across all types, with 17-micron and 18-micron wool being the hardest hit. The 17-micron wool dropped 139c/kg in Sydney, and 146c/kg in Melbourne. The significant falls reflect global sentiment in the wider market, and with the wool price showing relative resilience in previous weeks, perhaps it had some catching up to do.

News from the auction rooms was that European and other non-Chinese buyers were almost entirely absent. Buying was dominated once again by Chinese top-makers, which brings some credence to the rumours that Chinese production is beginning to ramp up again.

Looking online, 481 bales were sold, which was a sharp increase on the previous weeks 22 bales. 16-micron wool sold to a top of 1434c/kg (greasy) or 1938c/kg (clean), while 17-micron wool sold to 955c/kg (greasy) or 1728c/kg (clean). 19-micron wool sold to a top of 1072c/kg (greasy) or 1700c/kg (clean), while 20-micron wool sold to 1128c/kg (greasy) or 1709c/kg (clean).

Back to the auction rooms, 30,871 bales were sold, with a 26.5pc passed-in rate. Next week will see a larger offering of 50,000 bales.

In these tumultuous times it is hard to say what the next week will bring. With industries worldwide on restrictions or lockdown, one would think that a level of normality and stability is still some way off.

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