Wool prices are at a 22-month high due to small offering

A small offering of wool has improved the Eastern Market Indicator by 30c/kg, but what’s expected this week as more bales will be on offer?

Wool prices are at a 22-month high.

The benchmark wool price is at its highest level in almost two years.

At sales last week the Eastern Market Indicator jumped 30c/kg in a week to 1225c/kg – up 53c/kg on the same time last year and the highest level in 22 months.

Merino fleece prices rose 22-59c/kg across Sydney, Melbourne and Fremantle sales, while the national offering was low at 32,598 bales with only 3 per cent passed-in.

Moses and Son managing director Marty Moses, from Temora, NSW, said the 30c/kg increase was “pretty significant” especially due to the US dollar rising.

“There was a 9c/kg rise in the EMI in US terms, which is positive, considering for the month of February the EMI in US prices fluctuated 10c/kg all month,” Mr Moses said.

Mr Moses said while the price rise was good news, it was possibly driven by a lack of quantity.

“Bales offered are down 14.3 per cent year-on-year.”

“It was a welcome price rise, but I think we need a 20 per cent rise to keep people in the industry.”

Mr Moses said consumers needed more “money in their pocket” for things to then improve at the retail level.

The southern micron indicator for 19 micron wool jumped 43c/kg to 1522c/kg, while the margin between the lower micron wool is fairly narrow with 17 micron wool at 1710c/kg.

“When you look at the data, 19.5 micron wool and coarser categories are on or above the five-year average. There’s only about 100c/kg between 18.5 micron wool and 20 microns,” Mr Moses said.

“History tells us as those prices compress, we should be getting to the bottom of the price cycle.”

There is 37,900 bales on offer this week.

“Early indications are that the market will hold those levels or slightly increase,” he said.

According to the Australian Wool Innovation market commentary the price gains were made steadily.

“The often frenzy of bidding in similar bullish auction scenario’s of the past were largely unseen... there was no apparent panic buying. Therefore, subsequent price gains were seemingly borne from largely economic – not emotional – derived results,” it said.