Eastern Market Indicator for wool falls to 10-year low
Wool prices across all categories have recovered since the markets opened for selling on Tuesday, after plunging to a 10-year low. Here’s what experts forecast the Eastern Market Indicator will do during the rest of the year.
UPDATE: THE wool market has opened selling this week with positivity, lifting across all categories.
AWI reports that wool prices showed promising signs of improvement, with returns to growers lifting by 39c/kg.
This means the benchmark Eastern Market Indicator is back to almost the 900c/kg mark at 897c/kg.
Merino fleeces, skirtings and crossbred wool lines all strengthened, by upt o 50c/kg in places, while cardings also drew greater demand, rising by 10c/kg.
Wool prices could hover around 1000c/kg for the remainder of the year, as the ongoing coronavirus outbreak looms over the global market.
It comes as industry experts forecast the global coronavirus recovery could take longer than initially anticipated.
The Eastern Market Indicator closed trading last week at 858c/kg, after dropping below 1000c/kg in the last month.
A recent NAB report forecast the EMI could remain around $10/kg this year, before lifting to $12/kg in 2021.
Rabobank animal proteins analyst Angus Gidley-Baird said the EMI has reached a 10-year low.
The recent price slump, Mr Gidley-Baird said, was off historically high prices.
“The EMI was 852c/kg in November 2009. That would have been considered a good price.”
Mr Gidley-Baird said while there were signs of recovery in China, consumer confidence in woollen apparel sales wasn’t recovering as quickly as first thought.
“The economic recover … it’s starting to look like it might take longer to recover, and unfortunately from a wool point of view, clothing is more discretionary than buying food,” Mr Gidley-Baird said.
Australian Wool Innovation chief executive Stuart McCullough said while it was “sad to see the EMI where it is”, he has confidence in the resilience of Australian wool growers.
“Growers have seen worst prices than this, they have seen tougher times as well,” Mr McCullough said.
“Of course we want the wool price higher but we are largely captive right now to the economic damage and disruption of COVID-19.”
Mr McCullough said while the Chinese economy has “turned the corner”, demand could still be slow.
“At AWI our international marketing has been suspended while we assess how long this pandemic will cripple demand. The reason is simple we won’t and will never waste growers funds if it won’t create deliver benefit. But soon we will have a campaign in China and see 2021 as when places like the US and Europe will be in better economic and health shape,” Mr McCullough said.
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