Supply, demand assists wool to hit record highs

Supply, demand assists wool to hit record highs


Sheep
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WOOL records continue to tumble with the Eastern Market Indicator hitting a record high this week.

WOOL records continue to tumble with the Eastern Market Indicator hitting a record high.

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PRESSING TIME: Quality Wool national wool manager Glen Forbes says superfine prices are a great reward for those who have persisted with Merinos through the "doom and gloom" times.

PRESSING TIME: Quality Wool national wool manager Glen Forbes says superfine prices are a great reward for those who have persisted with Merinos through the "doom and gloom" times.

Last week the EMI rose by 45 cents a kilogram to 1623c/kg – nearly 25 per cent higher than at this time last season. This surpasses the previous peak of 1614c/kg in August.

Australian Wool Exchange senior market analyst Lionel Plunkett said there were several records, but cautioned the EMI had changed across the years to mirror the clip, making comparisons with previous boom times difficult.

The cardings indicator lifted 64c/kg during the week to finish at a new peak of 1289c/kg – up from 1080c/kg at the end of August – while superfine fleeces have also climbed.

Fleeces at 19 micron are at 1947c/kg, their highest point since 1995, having jumped from 1794c/kg in September, while 19.5M wools are at 1850c/kg, the peak since recording started in 2001.

Mr Plunkett said there were indications that prices could still rise.

“When I speak to exporters there is still a fair bit of inquiry,” he said. “In the past we have had a very sharp spike, which lead to a very sharp fall. The rise this time has been a steady increase.”

Mr Plunkett said the major driver was a shortage of wool available.

“Anything coming into storage is going onto the market,” he said.

“I don’t think there is a lot of wool on the market, which should bode well for post-Christmas.”

He said the biggest beneficiaries were the finer wools.

“The broader wool prices are still very good but premiums for microns start to increase rapidly once below 19.5M,” he said.

Quality Wool national wool manager Glen Forbes said he expected prices to ease slightly in the next few weeks.

“What usually happens is the market bolts away for a fortnight, then gets a reaction,” he said.

“When it comes back, it’s usually not by as much as it has gone up, so each time we end up with a positive.”

So far there is no sign of a reduction with markets Wednesday (yesterday) up to 80c/kg dearer for fleeces finer than 17M, while other superfine wool was as much as 40c/kg higher and even medium micron fleeces up 30c/kg.

Mr Forbes said the boost came down to the old adage of supply and demand.

With large numbers of sheep sold to abattoirs in recent years, supply had been hampered, while there was good international demand, particularly from China, where it has been “hand-to-mouth”, as well as interest from Europe, he said.

Mr Forbes expects ongoing low supplies.

“No one is going to rush back into sheep – it costs too much at $150 for ewes – while there is a lot of infrastructure gone,” he said.

“Those who have stuck with Merinos through thick and thin have gotten rewarded, and rewarded very well.”

Crossbred wools, or those at 30-32M, have not been enjoying the same bouyant run, but Mr Forbes said this, again, came down to supply.

“The world is full of crossbred wools from New Zealand and South America,” he said. 

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