AUSTRALIAN wool prices fell to new lows this week, as COVID-19 continued to impact global supply chains and consumer confidence.
The benchmark Eastern Market Indicator has fallen to its lowest level in five years in Australian dollar terms and in US dollar terms, to its lowest point in 10 years.
Australian Wool Exchange senior analyst Lionel Plunkett said good style wools and those with good additional measurement results were still in high demand and these wools were the least affected by the falling market.
“The large numbers of lesser style wools and those with poor additional measurement results, did not receive the same support; however, continually pushing prices down,” he said.
Mr Plunkett said individual Micron Price Guides (MPGs) across the country fell by 21 to 87 cents.
“Due to these losses, the AWEX Eastern Market Indicator (EMI) lost 55 cents for the series, closing the week at 1170c/kg clean.
“The EMI is now at its lowest point since 2015,” he said.
“The EMI when viewed in US dollar terms, dropped 48 cents, falling to US753 cents.
“This is the lowest the EMI has been in US dollar terms in nearly 10 years.”
Mr Plunkett said 11.8 percent of the offering was withdrawn prior to sale, bringing the national quantity down to 25,338 bales.
“Despite the reduced offering, buyer demand waned as the sale progressed and this resulted in continual price reductions.”
On a positive note, Mr Plunkett said since shutdowns and restrictions were first enforced in Australia in Week 38, sales across the country have continued under adverse conditions, with all industry stakeholders working together to ensure that wool auctions continue. During this time, more $250 million dollars’ worth of wool has been transferred from Australian growers to overseas exporters.
Consumer confidence has fallen off a cliff – Wilcox
Executive director of the National Council of Wool Selling Brokers of Australia, Chris Wilcox, said the fall in wool prices in the Australian wool market is unrelenting in response to the destruction of demand caused by the COVID-19 pandemic.
The Western Market Indicator fell the most, down 64 cents to 1246c/kg. The Southern Market Indicator declined by 62 cents to 1142c/kg and the Northern Market Indicator was 45 cents lower at 1214c/kg.
Mr Wilcox said one cause of the demand destruction is a collapse in consumer confidence in most of the major wool consuming countries and regions in April due to the COVID-19 pandemic lockdown.
Mr Wilcox said his Chart of the Week #1 shows the trends in consumer confidence levels in the major wool consuming countries and regions, including the latest data for April.
“Consumer confidence has fallen off a cliff in the US, Europe, Japan and South Korea.
“These plunges, combined with the social lockdowns, will no doubt be causing a collapse in retail sales,” he said.
“Unbelievably, the statistic on consumer confidence in China shows only a small decline in February, before an improvement in March.”
Mr Wilcox said April data is not available.
Next week’s national offering increases slightly to 25,660 bales. Due to limited quantities Sydney and Fremantle will have one-day sales. Sydney will sell on Tuesday and Fremantle will sell on Wednesday, in a move designed to avoid Melbourne selling in isolation.
Click here to see the latest AWEX Micron Price Guides.
Sources: AWEX, NCWSBA.