AUSTRALIAN wool prices this week suffered their biggest weekly fall since August last year as disruptions to global supply and consumer supply chains by the COVID-19 pandemic rock the industry.
Australian Wool Exchange senior market analyst Lionel Plunkett said exporters have reported that due to border closures they are no longer able to ship wool into Italy and India, two major customers for Australian wool.
“They have also reported increasing difficulty obtaining finance during this difficult time.
“These factors combined with overall concerns about the effects of this virus, sent buyer confidence plummeting and with it the wool market.”
Mr Plunkett said on the first day of selling the individual Micron Price Guides recorded falls of between 83 and 158 cents.
“These falls pushed the AWEX Eastern Market Indicator (EMI) down by 97 cents, the largest daily fall in the EMI since August last year.
“Although the fall in cents in August was higher at 112 cents, it was the same in percentage terms at 6.7 per cent,” he said.
“Understandably passed-in rates were very high on the first day, as many sellers were not prepared or not expecting the large drop in prices.”
More than 40pc of the national offering failed to reach seller reserve on the first day of auctions this week,” he said.
“The second day of selling the market continued to fall, albeit at a less dramatic pace.
“The MPGs across the country lost another 24 to 70 cents and the EMI fell by a further 58 cents,” Mr Plunkett said.
The EMI lost 155 cents for the series, closing at 1287c/kg clean, with brokers passing in 44.9pc of the 37,713-bale offering.
“Again, this was the largest weekly fall in the EMI since August last year, although this time the EMI lost more in percentage terms; 10.7pc this series compared to 9.7pc last August.
“This was the largest weekly percentage drop in the EMI since May 2003, where the EMI fell by 10.8pc.”
Mr Plunkett said despite the sharp losses, many sellers are keen to get their wool to market, pushing next week’s national offering higher. Currently, there is 44,612 bales available to the trade, with selling on Tuesday and Wednesday in all three centres.
Click here to see the latest AWEX Micron Price Guides.