European buyers keep Aussie wool market strong

Zach RelphCountryman
The Eastern Market Indicator fell 9¢ to close at 1568¢/kg clean last Thursday.
Camera IconThe Eastern Market Indicator fell 9¢ to close at 1568¢/kg clean last Thursday. Credit: Countryman/Bob Garnant

Australia’s wool market has again defied an expected drastic drop amid the coronavirus epidemic, with European buyers filling the Chinese void and showing “unusually strong purchasing intent”.

The Eastern Market Indicator just slipped 9¢ to close at 1568¢/kg clean last Thursday, despite market analysts and woolgrowers bracing for a major hit in the wake of the coronavirus outbreak.

Australian Wool Innovation trade consultant Scott Carmody admitted the slight fall came as a surprise, as European customers splashed cash for the greasy commodity.

“Wool markets continued to surprise with solid results arising from (last) week’s Australian wool auctions,” he said.

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“Merino lines dropped away just slightly along with the carding sector, but the crossbred wools man-aged to push upward with some large spikes at the finer end of the offering.

“The buying interest from outside China is very evident and has at times been dominant, particularly on the better style and specifications within the Merino fleece sector.

“This unusually strong purchasing intent from Europe has largely been the support mechanism for the Australian market over the past few weeks.”

Although last week’s wool value fall was minor, Mr Carmody noted the weakening Australian dollar had pushed the EMI lower in terms of US dollars.

“The EMI in US dollars was harder hit as the AUD devalued against the USD,” he said.

“The result was a 1.2 per cent or 12US¢ lower USD EMI of 1054US¢ clean/kg, which will help overseas users buying their wool in that currency.”

The Western Wool Centre at Bibra Lake recorded a fall last week, closing down 42¢ at 1667¢/kg.

It came as the Melbourne market dropped 9¢, with the Southern Market Indicator rounding out the week at 1546¢/kg.

Mecardo analyst Robert Herrmann said crossbred wools attracted upbeat bids on the east coast.

“Of note in Melbourne and Sydney was the crossbred section that improved 15¢ to 56¢,” he said. “The Fremantle catalogue being without these positives lost ground.

“Crossbred types bucked the general market trend to post good gains, however, cardings were cheaper in all centres ... again, poorly prepared crossbred lots at times found little support.”

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