Wool price anticipated to rise by 20c/kg

As wool prices finish the season on a downward trend, brokers are tipping short-term increases when trading resumes. See why.

A drop of 13c/kg in the Eastern Market Indicator for wool may only tell part of the story about fortunes to growers in the coming weeks.

The EMI fell a further 13c last week to finish the season at 1126c/kg; however, brokers are optimistic about a turnaround in prices when sales resume in three weeks.

Wool sales will continue this week followed by a three-week recess before selling resumes.

Wool broker Andrew Partridge of Michell Wool in Adelaide said there was a significant drop in the exchange rate last week, creating some business in China for Australian wool.

“The three per cent drop has created opportunities,” he said.

The Australian dollar is currently sitting at 0.67 US dollars.

“We are looking forward to seeing what the market does before we head into the three-week break,” Mr Partridge said.

The EMI fell a further 13c last week to finish the season at 1126c/kg; however, brokers are optimistic about a turnaround in prices when sales resume in three weeks. Picture: Zoe Phillips

He said the anticipation for Merino fleece could be a jump in prices of 10c/kg to 20c/kg in the coming weeks.

“It has been a difficult market situation, but we are in a good position to trade with China. They don’t have a lot of stock in reserve and will be looking to buy,” he said.

“There are some glimmers of hope on the horizon.”

Market analysis from Mecardo shows that the 2022-23 season was punctuated by uncertainty within the supply chain.

Abundant supply and stagnant demand was blamed for wiping 281c/kg or 21 per cent off the EMI throughout the season.

According to Australian Wool Innovation, US dollar pricing continues to highlight the demand by being 3 per cent lower for the week as opposed to the 1.1 per cent lower in Australian dollar pricing.

This provides a considerable price advantage for overseas manufacturers and traders, making wool of all types a desirable value proposition.

Mecardo has stated that Australian wool, in the context of the global wool trade, was more affordable to importers.

At the Melbourne sales, 16.5-micron wool dropped 966c this season to finish at 1985c/kg.

The 17-micron category fell 861c (to 1842c/kg), and the 20-micron types declined 154c to 1333c/kg.

At the sales in Sydney, 16.5-micron wool fell 942c to 1968c/kg, 17-micron categories dropped 869c to 1793c/kg, and 20-micron fleece fell 10c to 1316c/kg.

A total of 1,876,526 bales were offered to auction this season, with 1,629,053 selling and equating to an average of 36,076 bales sold per week.