Wool market plummets amid coronavirus shutdowns
Lack of demand amid the coronavirus pandemic has seen the wool market plummet to its lowest level in about four years.
THE wool market plummeted to its lowest level in about four years this week, as coronavirus shutdowns in the US and Europe mean only China was buying.
The benchmark Eastern Market Indicator fell a massive 155c/kg in two days of selling this week, to close yesterday at 1287c/kg.
That is a 20 per cent, or 322c/kg, drop since the opening week this year, when the EMI was at 1609c/kg.
As the industry has made changes due to coronavirus restrictions set by the government, wool sales are being held only two days each week, rather than three.
However, this did nothing to improve demand.
Elders national wool selling centre manager Simon Hogan said the national pass-in rate was 44.9 per cent and the withdrawal rate prior to sale was 16.6 per cent.
“Buyers were bearish and thought the market might be a bit cheaper this week, but the size of the fall surprised some,” Mr Hogan said.
He said part of the reason was the lockdowns due to coronavirus in the US and Europe, meaning orders for wool had been cancelled.
And after its shutdown, Mr Hogan said China was still trying to get up and running fully.
It means China was the only buyer of Australian wool this week.
“Italian mills are virtually at a halt and at the moment the market is reliant on one buyer, which is China,” Mr Hogan said.
“There is also concern with how consumers will react and the retail environment.”
It comes as the National Auction Selling Committee agreed to hold an extra sale in Week 42 — the week after Easter, which would normally be a recess.
Mr Hogan said after the Government gave the OK that wool auctions were an essential service, it was decided an extra week would be helpful.
But he said the news of the extra week has been met with “mixed results” due to the concern with the extra quantity on offer.
“When we had the Talman system issue in Week 35, we have had increased volumes and we haven’t caught up … it is the perfect storm with limited demand and increased offerings.”
The crossbred wool was hit the hardest this week, with the 28 micron indicator now under 800c/kg at 831c/kg and the 30 micron indicator below 600c/kg at 541c/kg.
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