Wool manager has confidence
The wool market finished two per cent lower last week with the Eastern Market Indicator closing at 1165 cents/kg clean.
Australian Industries Secretariat's Peter Morgan said the softer market was expected by members of the trade, given the size of the offering and current trend.
"All reports suggest that China is very quiet at the moment," Dr Morgan said.
But he said the EMI still remained at a healthy level in historical terms.
_Countryman _ spoke to Queensland Cotton national wool manager Michael Avery who was visiting WA to attend an AWTA board meeting.
Mr Avery said he felt current wool prices would be sustainable over the next five years.
"It may fall to 1100c/kg clean but I don't foresee it falling any further," he said.
Mr Avery said China's growth was expected to continue with more of the population aspiring to luxury goods, including wool garments.
"While the European economic situation has a long way to go, the US is closer to turning the corner," he said.
Mr Avery also said Russia would be one of the emerging economies where there would be an increase in demand for wool wear.
"Wool is going through a resurgence and Australian Wool Innovation is behind a very important message of informing consumers to choose wool over man-made fibres," he said.
Mr Avery said the current supply of wool and, in part, demand put pressure on the infrastructure of the industry.
"At this point I don't feel it is an issue but we are in fear of becoming a cottage industry should demand for wool products decline," he said.
"Wool must lift its share of the global textile market to ensure the long-term viability of the industry."
The National Council of Wool Selling Brokers of Australia executive director Chris Wilcox was also in WA for the AWTA board meeting.
He said the International Monetary Fund (IMF) predicted the world economy would grow by 3.5 per cent in 2012 and 4.1 per cent in 2013.
"The biggest concern for wool is that the IMF predicts that Italy's economy will contract by 1.9 per cent in 2012 and 0.33 per cent in 2013," Mr Wilcox said.
He said the IMF predicted that China would see growth of only 8.2 per cent in 2012 and 8.8 per cent in 2013, compared with an average of 10.2 per cent in the past 10 years.
"However, IMF predicts that the slower growth in China will be due to slowing exports and investment while the country's domestic demand should remain resilient."
Last week's 55,504 wool bale offering will shrink this week when only 41,616 bales are rostered for sale.
Present estimates for the following two sales are 44,030 and 40,000 bales respectively, a decrease of 6.3 per cent over the three-sale period compared to last year.
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