AUSTRALIAN Wool Innovation Stuart McCullough has claimed suspending wool market commentary earlier this month was “the prudent thing to do” during the COVID-19 pandemic.
AWI halted its weekly market commentary by trade consultant Scott Carmody two weeks ago, after the benchmark AWEX Eastern Market Indicator slumped 155 cents the previous week.
The market has been hit by less competition for raw wool due to domestic and global COVID-19 impacts on major European and Indian processors and reduced American and Chinese consumer apparel demand.
The AWI decision has elicited various reactions from the industry, ranging from those who supported AWI’s departure from market reporting during the pandemic to those who believe it reflects the company’s culture on market transparency.
AWI initially gave no reason for halting the AWI market commentary, with a company spokesman earlier this month telling Sheep Central that: “During these uncertain times the decision was made to provide a market report that detailed price movements. That will continue for the foreseeable future.”
However, when asked if the recent one-week drop in the AWEX Eastern Market Indicator led to the AWI decision, Mr McCullough said: “The world is dealing with a one in one hundred year pandemic and the information on so many levels is both imperfect and fluid.
“That’s why I took the decision to have the market report with only the facts,” he said.
“It was the prudent thing to do at a time also when I and many other people at AWI were being asked advice of whether or not to sell or hold wool.”
Information is king, but I understand – Lawrance
Western Victorian wool grower Rob Lawrance said information is “king,” but he understood and sympathised with the AWI decision.
“But during a time of wicked markets and complexity like this, I don’t think it is giving us any information that pertinent to anything.
“Reporting chaos doesn’t give you a trend other than it is chaos and we all know that.
“I understand that it (the COVID-19 pandemic) is peculiar and the whole commodity market has gone pear-shaped,” he said.
“I don’t think there needs to be any in-depth market report, but some sort of indice reference might be good.
“The growers know that it is not indicative of anything except chaotic commodity markets,” Mr Lawrance.
“None of medium and long-term management has any bearing on the markets at the moment.”
Decision sums up AWI’s leadership and attitude to transparency
However, New South Wales grower Martin Oppenheimer said the decision “sums up AWI currently.”
“They are followers, not leaders.
“It is symptomatic of why the Australian wool industry is contracting so quickly,” he said.
Referring also to recent statements by AWI chair Colette Garnsey that understated the demand for non-mulesed wool, Mr Oppenheimer said AWI was not prepared to be truthful with growers.
“It is all part of the same culture, they are leading the industry nowhere, they are leading growers nowhere, because they are not even being truthful with growers about what the real market signals are.”
Mr Oppenheimer said the decision to halt market commentary was an issue of AWI being transparent with growers. If it was AWI’s duty to report on the market, “then they should report the market,” but he said there was not necessarily any market failure in wool market reporting services in Australia.
“Is it OK for them to report the market every time it goes up but not when it goes down, what’s the point of that?
“If they are going to have transparency and help growers understand what the true market signals are, in this case for the last month, when we’ve had customers in desperate trouble crying out for us to suspend sales, it probably would have been helpful if they continued to report through that period and just tell us as it is, not picking and choosing and reporting the good news, but not the bad news.”
In August last year, Mr McCullough attracted widespread criticism after he commented in an ABC radio interview on a 112-cent drop in the EMI.
“I didn’t like the number yesterday with 112 cents coming off the Eastern Market Indicator, that was particularly shocking.
“If a stock market was falling like that then they would shut the market down and…” Mr McCullough said.
“I think that some sort of mechanism or some sort of an emergency strategy that we instigate around the sale of wool when situations like that, is probably worth considering,” he said.
Market commentary is AWI’s prerogative – Colley
National Council of Wool Selling Brokers of Australia president John Colley said AWI’s decision to not provide a market report or commentary at this time is their prerogative.
“There are plenty of reports still available, including the AWEX report, which is the industry agreed measure.
“Information travels freely between all the players within industry, when it comes to market conditions and commentary,’ he said.
“The commercial players including growers, have plenty of access to information through brokers and various websites that include all the relevant factors influencing market trends.”
AWI should report on the retail market – Small
Western District wool grower and market manufacturer Peter Small did not believe AWI should be financing a wool market report, unless it set up its own market intelligence unit, independent of the trade.
“Because everybody in the market has a view of the market and growers shouldn’t be getting just what one trader is saying.”
Mr Small said it was appropriate for the media to seek various market viewpoints.
“But one trader or person in the market being dressed up as an AWI report, which growers might be inclined to take it as authoritative, is misleading the growers, because it is only telling them what one person is saying.”
Mr Small did not believe AWI know what was happening in the greasy market and doesn’t have any credibility.
“AWEX reports the market in a properly sampled way and if anyone wants further commentary on it, the press should go to whoever they want.”
He said growers deserved an explanation for the withdrawal of the grower-funded AWI commentary and raw wool prices should be fully reported regardless of the state of the market.
“If AWI could demonstrate that they do really understand what’s going on with the retail trade in the Northern Hemisphere, then they’ve got a responsibility to report that to growers, because they could claim that they are closer to the retail market than they are to the greasy market.
“I think they should be reporting back what their intelligence is telling them about the retail market.”
Mr McCullough rejected the suggestion that Mr Carmody was gagged from further wool market commentary because of objection to a recent Farmonline article where the trader suggested that the breeding direction of the Australian flock could be contributing to dust penetration and loss of production costing wool growers an estimated $450 million.