Wool market shows some green shoots but will it last?

Small lift in EMI brings hopes wool has hit bottom

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HANGING ON: The Australian wool market has taken a welcome but small price rise after a month-long nosedive which has sapped industry confidence.

HANGING ON: The Australian wool market has taken a welcome but small price rise after a month-long nosedive which has sapped industry confidence.

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The wool market has staged a small comeback after weeks of price falls.

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The benchmark Eastern Market Indicator crept up one cent to 1180c a kilogram clean during Tuesday's sale in Melbourne, raising more hopes the wool market may have hit rock bottom.

Last week the EMI rose an encouraging 9c after a month-long nosedive, thanks largely to the global economic chaos caused by coronavirus.

While the signs were encouraging in Melbourne, the story wasn't as positive across the west at Fremantle's only sale for the week during which the Western Indicator shed 23c to 1214c.

The Southern Indicator in Melbourne edged up 2c to 1149c with 6.5pc of the 5255-bale catalogue passed-in.

Larger volumes of higher yielding wool across the 19 microns and broader categories pushed up prices by 20c a kg while wools 17 microns and finer were fully firm, AWEX said.

Australian Wool Network's Victorian manager, Kelvin Shelley, said the strong competition was "great to see" and encouraging given the current state of the global economy.

But the Fremantle fleece market softened with 19.5 microns and finer falling by 30 to 45c and 20 microns and coarser losing 20-30c.

More than 15pc of the fleece was passed in from an offering of 4382 bales.

The Melbourne and Fremantle sale grossed $11.4 million with a combined pass-in rate of 10.5pc.

Last week 23,371 bales were offered, 1967 fewer than the previous week.

AWEX said year-on-year, the national offering has fallen by 165,300 bales or 10.9pc.

Crossbred wools didn't share the modest price rally enjoyed by Merino lines last week with 26 to 30 micron price guides sliding by 20 to 26c. The 32 micron category fell to a record low of 270c.

Executive director of the National Council of Wool Selling Brokers of Australia, Chris Wilcox, said last week's moderate rise had lifted Merino wool prices by as much as 45c.

"Wool prices have fallen sharply in the past few months, particularly in US dollar terms. For example, the EMI is down by 30pc since January while the 18 micron price guide has fallen by 27pc," he said.

Mr Wilcox said oil-based synthetic fibres like polyester and acrylic had fallen by 13pc and 21pc respectively but were already in sharp decline by January as oil prices were slumping.

Australia's wool exports fell by 14pc in March, led by a 16pc fall in shipments to China. The value of exports was down by 26pc.

For the first nine months of the 2019-20 season, the volume of exports was down by 16pc compared with the same period in 2018-19 while the value of exports was down by 32pc.

Mr Wilcox will head an international panel who will discuss the outlook for wool during the International Wool Textile Organisation's first digital congress this week.

He is also chairman of the IWTO's market intelligence committee.

Sales will be held in Melbourne and Sydney today (Wednesday).

The story Wool market shows some green shoots but will it last? first appeared on Farm Online.

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