The selling week began with further uncertainty leading up to this weeks Melbourne sales as a result of Vic government interpretation of CV -19 rules. Initially the industry was told sales in Melbourne could not continue in the current location and format. This was eventually clarified and sales continued, but unfortunately the continued decline in price has added to the wool industry woes.

The Eastern Market Indicator (EMI) dipped below 1,000 cents falling by 59¢ to close this week at 945¢. The AUD was stronger at US$0.725  which pushed the EMI in USD terms 30¢ lower, closing at 685¢. The Western Market Indicator gave up 67¢ from the previous sale to settle at 989¢.

The offering increased by almost 3,000 bales on last week to 33,176 bales, however the increased pass-in rate of 25.7% nationally meant that 24,639  bales were sold, almost 3,000 bales fewer on last week. The WA market sold just 3,168 bales with a pass-in rate of 44.3%.

EMI is now at its lowest point since September 2012, when it touched 927¢, and it now sits at 493¢, or 37% lower than the corresponding sale of 2019. In US$ terms the last time the market visited these levels was 2009.

Analysis by Mecardo’s Andrew Woods reported a somewhat more optimistic view when considering the wool markets performance relative to competitive fibres from a long-term perspective.

Falling supply in absolute terms and relative to the supply of major fibres such as cotton have been correlated with increased wool price ratios to these other fibres. With the prices for cotton and PSF flatlining, the increased price ratios have shown up as a rising trend in wool prices in recent decades. While the trend is positive, wool does have the loosest relationship of the three fibres with its trend, so prices tend to be more volatile as we have seen in recent years on both the upside and now the downside.

AWEX reported that falls in the opening day of sales in Melbourne & Sydney were in the 10 – 42 cents range, with further losses on the second day in the order of 12 – 57 cents. W.A. was more impacted with 69 – 89 cent falls on its one day sale.

Cardings again suffered a  hit, this week on average they gave up 30¢ in Melbourne & Sydney, with a 14¢ decline in Fremantle.

The week ahead….

Next week there just 22,436 bales rostered due in part to Fremantle not selling. This will take supply pressure away from the market so based on previous results we should at least see the market hold current levels.

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Click on graph to expand

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Data sources: AWEX, Mecardo

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