Wool Prices Continued to Climb Despite Increase in Supply

Wool prices in Australia have continued to climb since last season despite supply for the current season increasing by around 3-5 per cent relative to last year, the Australian Wool Innovation (AWI) has said in its March 2018 report. There are strong indications that the current price levels can be sustained and give a positive outlook for the industry.

“Wool remains at very competitive levels historically, despite pulling back slightly from the record highs seen over the past two months,” says AWI report. The Eastern Market Indicator (EMI) has risen somewhat consistently over the past 5 years, while the past 12 months has seen a very sharp rise in a short amount of time. The fast-paced nature of the rise left many in the market “catching their breath”. However, recent week-ending prices during the past month have fluctuated.

The Australian Wool Exchange export results show that an extra 5.3 per cent or 10.1 million kilograms of greasy wool has been sold this season compared to last, indicating that the market’s appetite for wool was not put off by the extra wool and was very quickly consumed by a number of countries including the major buyer, China. The Chinese currently take 74 of Australian clip, however this season China has imported a further 8.5 million kilograms, an increase of 6.1 per cent from the previous season. On the other hand, India has pulled back 1.6 million kilograms this season.

Wool prices overall remained steady in March 2018, with the EMI monthly average finishing March at 1782c/kg clean, a drop of 15c/kg clean since February. Despite this, the individual microns have had mixed results, wools of 17 micron and under continued to climb with 16.5 micron wools averaging more than 3000c/kg clean for the month of March. Wools above 17.5 micron and through to 20 micron have seen a lower adjustment over the month, dropping 30-40 c/kg clean. However impressive gains for microns between 21 micron and 30 micron have been seen in auction rooms across the month, particularly 23-26 micron which gained 70-80c/kg clean each.

A possible hindrance to further Merino price gains and an underlying factor to current price volatility is the mixed quality of wools being offered and the ebbs and flows of buyer exporter finance, or lack thereof.