Wool hits fresh highs

Headshot of Bob Garnant
Bob GarnantThe West Australian
Email Bob Garnant

Wool prices have reached a fresh five-year high, but large volumes to be offered over the next few weeks are set to test the market.

Last week’s 49,204 bale national offering pushed the AWEX Eastern Market Indicator up 15 cents/kg to 1378c/kg clean, according to AWEX market analyst Lionel Plunkett.

The Western Market Indicator jumped 6c/kg to close at 1444c/kg clean.

“Prices have continued to climb at the second largest offering for the season,” Mr Plunkett said.

“The jump in prices for superfine types pushed the EMI.

“Most activity was in the early part of the week, with Thursday finishing on a flat note when lots outside of specification tended to lose ground.”

Mr Plunkett said the past two weekly auctions before Christmas recess would have increases to over 55,000 bales. National Council of Wool Selling Brokers of Australia executive director Chris Wilcox said the EMI was at its highest level since July 2011.

“Superfine wool prices jumped by up to 60c/kg, with ultrafine wool recording the best gains,” he said.

“The medium Merino wools lifted a little, but prices for broader Merinos were a little soft.

“The $A was up 0.4 US cents to 74.1 US cents to 1021 US c/kg.”

Mr Wilcox said there were some very different circumstances happening during June 2011, when the EMI reached a record 1425c/kg clean.

“Back in the first half of 2011, cotton prices surged to the highest level since the US Civil War because of a short-term supply squeeze,” he said.

“Prices for all fibres, including wool, lifted as a result of the surge in cotton prices in 2011.

“At the same time, the $A was at just over US $1, which added to the level of wool prices in $US.

“While wool prices have jumped in recent weeks, cotton prices have remained steady at around 80 US cents/lb.”

Mr Wilcox said other fibres have been steady in recent months.

“Therefore the current rise in wool prices is all due to the demand for wool, helped along by the lower $A which is at 74 US cents,” he said.

The Elders International Wool Report stated that the long-term price trend of wool and its competing fibres were favourable.

“Woolgrowers will benefit from a rising cotton and synthetic fibre price trend,” the report said.

Get the latest news from thewest.com.au in your inbox.

Sign up for our emails