EMI hiccup on dollar rise

Headshot of Bob Garnant
Bob GarnantCountryman
Email Bob Garnant

Although the Australian wool market’s steady two month price climb came to an end last week, the eight cent drop in the Eastern Market Indicator (EMI) came on the back of a strong Australian dollar.

Australian Wool Industries Secretariat consultant Peter Morgan said the Australian dollar was trading at 104 US cents on Thursday and rose to $US1.05 on Friday.

“Financial commentators expect it could go to $US1.10, or higher, by the end of the year,” he said.

But Dr Morgan said any unforseen global financial downturn could reverse the dollar’s value.

“This week’s rise in the dollar was contributed to favourable economic reports, in particular strong Australian employment data on Thursday,” he said.

Other factors contributing to the EMI fall were quantities of heavy discoloured wool in the Eastern States market and drought-affected wool in WA, according to AWEX.

“Fremantle wools were of low yields and relatively short in length,” AWEX said.

Landmark said some of the hurdles facing continued growth of the wool market in 2011 included steps the Chinese Government would take to halt inflation and the effects of the tsunami crisis on the Japanese economy.

“Both countries could see a slow down in retail wool garment sales,” Landmark said.

Hope is pinned on continued economic growth in the US, Europe and South Korea to offset any downturn in Asia.

Wool sales will be held in Sydney, Melbourne and Fremantle this week and 41,663 bales are rostered for sale.

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

Sign up for our emails