Wool auctions lift but brokers warn of instability

Wool prices have lifted in early sales this year, despite the global economic downturn, surprising the industry. But brokers are warning the market is frail.

Demand for fine wool from China pushed the benchmark Eastern Market Indicator to 1291c/kg last week.

STRONG demand from China is driving a mini recovery for Australian wool growers.

But brokers are warning more buyers need to join Chinese bidders if prices are to be sustained.

Demand for fine wool from China pushed the benchmark Eastern Market Indicator to 1291c/kg last week.

This was a sharp rise of 89c/kg and somewhat of a recovery from the lows of last spring when the EMI dipped below 1000c/kg.

However it is still a way off where it sat 12 months ago, when its was 1550c/kg.

The resilience of the three weeks of auctions for 2021 — despite retail downturns across the globe due to coronavirus — “exceeded people’s expectations given the volume and the lift in the currency”, according to Elders wool selling centre manager Simon Hogan.

“It has been a great start to the year really,” he said.

But, there were winners and losers within the micron categories, Mr Hogan said, and not a lot of hope for coarser wools — which was in plentiful supply globally — in the short-term.

Finer micron clips sold well, with 16.5 micron fleeces fetching 2300-2400c/kg last week, he said.

However, medium micron wool was “going OK” and broad microns were “very disappointing for crossbred growers”.

Australian Wool Innovation director and Dubbo broker Don Macdonald said the market opened “better than expected”.

Much of the lift in auction action was thanks to Chinese orders for “government, not military, but government uniforms”.

However, he said a return of “top end” Italian buyers, who had been all but “wiped out by COVID”, would give the industry more confidence that prices could be sustained.

“Thank God China is there, they are keeping our heads above water,” Mr Macdonald said.

China is currently buying 90 per cent of Australia’s wool, up from 70 per cent throughout the past decade.

Some of the lift in the price for finer wools was also due to reduced supply as flocks rebounded from drought, producing broader micron fleeces.

Also, the severe shearer shortage was also delaying shearing on many properties, meaning supply would be boosted later in year, and into next year as numbers rebuilt.

This week’s auctions are expected to see a lift in offerings with brokers tipping the easing seen at the end of last week’s auctions was likely to continue this week.

MORE

20 MOST INFLUENTIAL PEOPLE IN AUSTRALIAN AGRICULTURE

NATIONAL SHEEP FLOCK OFFICIALLY EXPECTED TO REBUILD