Demand for finer microns linked to modest price rise

Wool prices lifted a modest 3c/kg in the benchmark Eastern Market Indicator last week, moving towards the 1100c/kg level.

AWEX said the EMI rise, helped by a lift in demand for finer microns, reversed the losses that occurred from the previous two weeks. "Buyers were increasingly selective and lower specification types attracted sizeable discounts," AWEX said.

"In particular, the high mid-break and over-length wools were neglected at times and suffered heavy penalties."

National Council of Wool Selling Brokers of Australia executive director Chris Wilcox said the modest wool price rise was in contrast to cotton prices.

"Cotton prices have been under pressure as global stocks continue to build," he said.

"The United States Department of Agriculture predicts global stocks will increase to a record level of 20,600 million kilograms by the end of the 2013-14 season."

Mr Wilcox said the main reason for the build-up in cotton stocks was due to a high floor price in China for domestic cotton.

"The Chinese Government's floor price scheme over the past two years has held its domestic prices well above world price levels," Mr Wilcox said.

"This has resulted in more cotton yarn imports rather than buying high-priced domestic cotton yarn. Cotton stocks have built up in China and the floor price scheme continues, which can't be maintained and will inevitably end in tears."

Landmark said the outlook for wool prices for the current quarter was mixed.

"Prices are likely to be relatively subdued in the first part of the quarter due to the added supply from the usual spring flush," a Landmark spokesman said.

"The Organisation for Economic Co-operation and Development leading indicators of economic conditions in the major developed countries point to a pick-up in the next few months.

"Wool prices, in particular fine wool prices, will improve towards the end of 2013 and into 2014."