Wool Market Reports

Good wool in demand as Australian prices slump to new lows

Sheep Central May 8, 2020

Wool with good style and measurements is still in demand despite prices slumping to new lows. Image – AWEX.

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Mr Plunkett said 11.8 percent of the offering was withdrawn prior to sale, bringing the national quantity down to 25,338 bales.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.

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Comments

  1. Jim Gordon, May 9, 2020

    Mr Wilcox, a very interesting ‘Chart of the Week’. It certainly paints a devastating picture. China gives us some hope. The thing I don’t understand is, why Australians want to keep belting China. They have helped me rear my family over the last 15 years, buying my beef, sheep meat and wool. I have high praises for the Chinese and after being there in 2017, my thoughts where confirmed.

    • Donald Cameron, May 10, 2020

      Try joining the dots Jim:
      Wuhan + wet market, bat meat + coronavirus, thousands die + secrecy, whistleblowers mysteriously murdered, Australian PPE exported to China by daigou, 1 million ethnic Uighurs in prison camps, ethnic cleansing in Tibet, debt trap diplomacy in Pacific, islands created out of reefs in South China Sea, newly-built islands have ports, airbases and missiles, one-party state vs democracy, president for life vs Australian PM for three years … China is ruled by a bunch of generals.

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