Up to 20 per cent of bales store nationally as prices drop
The number of bales in storage across the country could rise dramatically the longer prices are depressed. Here’s what is happening in the wool market.
ABOUT 20 per cent of Australia’s wool production is believed to be sitting unsold in brokers’ sheds as coronavirus volatility continues to disrupt the market.
And that number could swell to dramatic proportions as the Eastern Market Indicator has dropped to an eight-year low.
On Monday the EMI sat at 945c/kg, a 568c/kg drop on the 1513c/kg recorded on August 21 last year.
Elders auctioneer Samantha Wan said there was “a different atmosphere” at the Brooklyn woolstore last week, with buyers hesitant to make an offer.
“I auction in the Merino fleece group … it was slow for the first 15 minutes, there was a sense of reluctance and resistance to jump in and bid,” Ms Wan said.
“It was a bit more work than usual, but there were growers wanting to sell.”
There was a softening in price across all micron categories last week.
The 17 and 17.5 micron wools recorded the most dramatic price drop, plunging 48c and 38c respectively since last week’s sales.
About 25.7 per cent of last week’s 33,176 bales was passed in, an increase of 17.5 per cent on the week prior, according to the report.
Independent Commodity Services analyst Andrew Woods said the last time the EMI dipped below 1000c/kg was in late 2012.
Mr Woods said all fibres — cotton, acrylic and wool — peaked in price mid-2018 before retracting throughout 2019.
“There was general weakness in the fibres prices,” Mr Woods said.
“Wool held up a little longer, it dropped slightly then bounced back up. It was holding quite nicely. Then COVID-19 turned up, and that’s added another downturn onto an existing downturn in price.”
Mr Wood said it was difficult to estimate how many bales could be left in storage this season, as “there’s never any data … there’s always speculation”.
“There’ll be plenty of wool in store … there’s probably in the order of about 20 per cent of production sitting in brokers’ stores,” Mr Wood said.
“That’s certainly going to be replicated out of places such as South America. Stocks might not be on farm, but they’ll be floating around somewhere …. what we see in Australia will be reflected in other wool production areas, maybe even more so.
“And I’m guessing there will be more (wool in storage) at the end of the season, depending on how demand tracks for the second half of the season.”
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