Wool Market Reports

Australian wool growers withdraw bales as prices drop lower

Sheep Central, May 1, 2020

Merino wool prices dropped further this week, reflecting lower global demand. Image – AWEX.

AUSTRALIAN wool prices continued to track downward this week as the global impacts of the COVID-19 pandemic hit major garment markets.

AWEX senior market analyst Lionel Plunkett said there were losses across all Merino microns and descriptions.

“After 10.3 percent of the national offering was withdrawn prior to sale, the total number of bales available to the trade reduced to only 22,094 bales, with a total value of $21.92 million.

“The drop in prices resulted in a national passed-in rate of 25.7pc, meaning only 17,018 bales were sold,” he said.

Mr Plunkett said the main buyer focus continued to be on the better style wools, but these wools were in limited supply and the offering was dominated by lower yielding lesser style wools.

“The individual merino Micron Price Guides (MPGs) fell by 39 to 89 cents, with the reductions felt across the board.

“On the back of these losses, the AWEX Eastern Market Indicator dropped by 47 cents, closing the week at 1225 cents/kg clean.”

Mr Plunkett said it was worth noting that, due to currency movements, the fall in the EMI in US dollar terms was not as severe, with the EMI only losing US2 cents for the series.

Crossbred wool prices also dropped this week – with crossbred MPGs down 4-13 cents — but not at the same rate as their Merino cousins.

“The MPG for 32 micron wool fell to 271 cents, the lowest figure since AWEX records began (1997/98).

“The minimal reductions in the crossbred MPGs prevented the EMI from falling further than it did,” Mr Plunkett said.

Prices for locks, stains and crutchings generally fell by 10 to 40 cents this week, pushing the three Merino Carding Indicators (MC) down by an average of 24 cents.

Next week’s national offering increases to 26,328 bales. Due to the amount of wool on offer, Sydney and Fremantle only require one day of selling, Fremantle offering Tuesday and Sydney offering Wednesday. This move prevents Melbourne from selling in isolation, which is selling over both days.

Wool demand has dropped – Wilcox

In his latest weekly newsletter, National Council of Wool Selling Brokers of Australia executive director, Chris Wilcox, said wool demand has really dropped, and it is not being helped by a large portion of the offering being lower yielding, poorer quality, drought-affected wool.

“Obviously the COVID-19 pandemic has had a huge impact on demand for wool, as it has on demand for many commodities and raw materials, as well as products around the world.

“The market for wool used in clothing has been hit by a double whammy over the past 18 months or so,” he said.

“First came the US-China trade war (remember that?), which triggered a sharp fall in Australian wool prices from the supercycle peak.

“There was a resultant 24pc drop in the EMI in A$ terms from the supercycle peak in August 2018 to January 2020. The fall was more in US$, Euro and Renminbi, down by around 28pc,” he said.

“It appeared that the downturn in wool prices had stabilised by the start of 2020, but then the spread of COVID-19 started in China.

“We now have the global pandemic and the associated shut down of swathes of the global economy,” Mr Wilcox said.

“The Economist magazine is calling it the 90pc economy.

“This has hit raw wool demand hard, with the EMI falling by 21pc in A$ terms since the end of January to this week,” Mr Wilcox said.

“It is down by between 22pc and 23pc in $US, Euro and Renminbi terms.

“This double whammy is the most severe challenge that the wool industry has faced for many years.”

Click here for the latest AWEX Micron Price Guides.

Sources: AWEX, NCWSBA.


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