No need to intervene in wool market says grower chief

Big wool price fall doesn't warrant intervention, says grower chief


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KEEP SELLING: There is no appetite for intervention in the current slide in Australian wool prices.

KEEP SELLING: There is no appetite for intervention in the current slide in Australian wool prices.

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Wool auctions should continues despite last week's big price drop of almost 10pc in the benchmark eastern market indicator.

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Australia's peak woolgrower body has rejected any push to halt wool auctions in response to last week's horror price fall which saw the eastern market indicator (EMI) shed 163 cents to finish at 1513c a kg clean.

Ed Storey, president of WoolProducers Australia was responding to comments by Stuart McCullough, CEO of Australian Wool Innovation, who suggested late last week in a radio interview that an emergency strategy in times of market free-fall was "probably worth considering".

Mr McCullough said a similar drop on the stock exchange would have halted trading.

He has since clarified his remarks saying that while the fall in price last week was dramatic, suggestions that "AWI would advocate for any notion of market intervention was pre-emptive and not the role of the not-for-profit research, development and marketing company".

"Aggressive market intervention is not something AWI advocates for, however what we do advocate for is the consideration of a constructive industry discussion around market risk mitigation.

"This is a worthwhile conversation for the industry to engage in," Mr McCullough said.

"The industry has seen record prices in recent months and coming off these price heights make any reduction in the EMI appear dramatic.

"Woolgrowers have demonstrated great resilience in better and in worse times and it's important we remain confident during this period of market fluctuation. I am certain this cycle will again highlight woolgrowers' and the industry's resilience."

But Mr Storey said while last week's nosedive was concerning, his organisation would strongly oppose any move to intervene in the market.

He said all markets went up and down and in times of wool price downturns, growers had the option of withholding their clips or passing them in when prices didn't meet their reserves.

"AWI has no jurisdiction in that matter, they are an R&D and marketing company," he said.

Chris Wilcox, executive director of National Council of Wool Selling Brokers of Australia, said his organisation also didn't believe any market intervention mechanism was needed in the event of a price slide.

He said the wool market was self-regulating and growers could choose whether to sell their wool or not.

Wool wasn't a perishable product and could be stored.

"No additional regulation is needed," he said.

Mr Wilcox said many growers had responded to the downturn in the past two weeks by withdrawing their wool.

He said the wool market was being buffeted by a number of negatives on the macro-economic and geo-political fronts, headed by the US-China trade war.

The wool textile industry in China and elsewhere was feeling the squeeze and it was hard to see any immediate rebound in prices.

However, he was hoping prices would stabilise in the coming weeks

"We have had a terrific run of prices over the last two years to 2.5 years," he said.

"Even at $15 (a kg) we are still above the kind of levels we saw four years ago."

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