Wool market: Sharpest weekly price fall since 1991
Continued coronavirus concerns have seen wool prices take their sharpest weekly fall since the floor price was scrapped in 1991.
WOOL prices last week took their sharpest weekly fall since the floor price was scrapped in 1991, as coronavirus woes continue to sap confidence out of consumer’s appetite for wool.
Reopening after a three-week break, the market hit new lows – now 40 per cent lower than this time last year – with the Eastern Market Indicator resting at 1006c/kg.
This is down from 1700c/kg 12 months ago, and also represents an 11.3 per cent drop on July prices, in percentage terms the biggest weekly fall since the 90s.
The 1991 downturn – which lasted almost a decade – saw the market struggle on with an oversupply of more than four million bales.
While not comparable on scale, brokers have this week warned wool growers were now holding “significant” volumes on farm and in stores.
And, the recovery was likely to take “a couple of years”.
Australian Wool Network national wool and livestock marketing manager Mark Quartermain told The Weekly Times he estimated there was now “in excess of 250,000 bales” held. This was “significantly up” on storages of the past five years.
Many growers planned to sell during the traditional February to April period and given that prices had been very good, when the pandemic hit, decided to try to ride out the market.
“A lot of people were also getting good livestock prices, so didn’t require cashflow,” he said.
The speed of last week’s price plummet, given the market had been firming before the recess left growers, brokers and exporters “surprised and very disappointed”, Mr Quartermain said.
“In the first 10 minutes of selling we could see it was going to be worse than we thought.”
AWEX senior market analyst Lionel Plunkett said the EMI’s drop of 128 cents to 1006c/kg clean was the biggest weekly fall since April, when it lost 155c. But viewed in percentage terms, the 11.3 per cent drop was the greatest weekly fall since 1991, when the floor price was abolished and the EMI fell by 39.1 per cent.
Mr Quartermain said prices were “in a nutshell, in the area of break-even or heading towards that”.