Coronavirus crisis: Wool market mauled as world economy reels

The coronavirus pandemic has thumped Australia’s wool market to end the greasy commodity’s strong four-week stand defying expected significant falls.

The Eastern Market Indicator closed 41¢, or 2.6 per cent down last Thursday at 1521¢/kg clean, in the wake of growing global concerns surrounding the viral disease.

Australian Wool Innovation trade consultant Scott Carmody attributed wool’s spiralling value to the pandemic.

“Australian wool auctions finally succumbed (last week) to the slump in the global economy caused by the COVID-19 viral outbreak and the enormous flow-on effects,” he said.

“The series of unfortunate events over the past month or so had seen the wool price bravely stand against the obvious thoughts of price degradation.

“The largest influencer at present is that all stock and share markets have officially hit bear-market status. This affects businesses access to finance, lost true value of the enterprise and their ability to service debt and liquidate inventory or capital assets without damage.”

The EMI fell US52¢, or 5 per cent, in US terms last week to close at US982¢/kg clean.

“Half of that fall was made up by the greatly reduced Australian dollar against the US dollar,” Mr Carmody said. “Even more crushing was the Euro value of wool as it fell 6.3 per cent over the week.”

Last Thursday, the Western Market Indicator fell 46¢ to close at 1616¢/kg after the selling week at Bibra Lake’s Western Wool Centre.

It came as 43,579 bales were offered nationally to mark an 18,597 bale decrease week-on-week.

Of the bales offered, 25.5 per cent were passed in.

Australian Wool Exchange senior market analyst Lionel Plunkett said bale offerings had fallen season-on-season.

“This season the amount of wool put through auction is still well down,” he said. “Compared to the corresponding sale of the previous season, there has been 126,694 fewer bales offered for sale, a reduction of 10.5 per cent.

“(Last week) better style wools, wools carrying less than 1 per cent vegetable matter and those possessing favourable additional measurement results attracted excellent buyer support.

“As a result of this support, these types were the least affected by the falling market.”