Wool prices: Australian dollar weakens, Europe and India demand rises

A weakening of the Aussie dollar and demand surges in Europe and India have helped wool to its best price of the season.

A dip in the Australian dollar is creating a surge in demand for wool which is closing in on the best prices seen this season.

The Eastern Market Indicator rose 2 per cent this week after a similar gain the week before, closing at 1427 cents a kilogram.

This is just 22c/kg behind the season’s previous best.

Given the rise, pass in levels were low.

Of the 41,298 bales, offered, 91 per cent sold on the improved rates which were up to 60c/kg dearer for finer types.

The better prices are attracting more wool into the market, some of which may have been passed in at earlier sales.

About 46,000 bales are rostered across two days of sales next week.

In its weekly analysis of the wool market, Australian Wool Innovation said demand was steady, but currency moves provided the impetus for buyers.

“The substantially weaker Australian dollar against the US dollar and the Euro provided almost all of the entire average market value gains,” an AWI spokesman said.

“As has been the case since the New Year, demand remains remarkably stable as witnessed by the steadier prices when converted to US dollars.”

While the market was dearer for growers, values slipped slightly in US currency terms.

Demand from China remains strong, according to the AWI, with “only a slight drop in activity over the past month … due to the logistics and ongoing pandemic management issues currently being dealt with in that nation”.

“Despite this softening, other significant users from India and Europe have stepped up their operations and are seemingly revering towards pre-Covid levels of operation,” the spokesman said.

“Most sections were extremely active in purchasing this week, with Chinese indents and one of the major Chinese top makers providing stiff opposition to the largest traders. 

“As a result, Merino wools finer than 18.5 micron gained 40-60c and 19 micron and broader gained 30c.”