Volatility ‘resilience’ backed to stem wool fall
The Australian wool market has suffered its biggest fall in more than 15 years in the wake of a volatile week’s trading.
The Eastern Market Indicator closed at 1513¢/kg clean last Thursday, or 9.3 per cent down, after shedding 163¢/kg to record wool’s biggest weekly decrease in value since 2003.
It marked a 603¢/kg clean fall year-on-year from the record highs enjoyed 12 months ago when it was trading at 2116¢/kg clean.
However, Australian Wool Innovation chief executive Stuart McCullough was reluctant to describe the greasy commodity’s drop as a market crash.
Mr McCullough instead threw his support behind the textile fibre and said he was confident the wool industry’s resilience would manage through the price cycle.
“The industry has seen record prices in recent months and coming off these price heights make any reduction in the EMI appear dramatic,” he said.
“Woolgrowers have demon-strated great resilience in better and in worse times and it’s important we remain confident during this period of market fluctuation.
“I am certain this cycle will again highlight woolgrower’s and the industry’s resilience.”
Last August, the EMI broke into new territory and surged to the 2116¢/kg clean record high.
Since then, the market has been unable to sustain the peak, with wool value gradually softening on the back of weakening international demand. Following last week’s fall, Mr McCullough told an Eastern States radio station that an “emergency strategy” to implement when the wool market was tumbling was “probably worth considering”.
When probed by Countryman about the comments, the AWI boss steered clear of the statement.
“Suggestions that AWI would advocate for any notion of market intervention was pre-emptive and not the role of the not-for-profit research, development and marketing company,” he said.
Mr McCullough added “it was important to acknowledge” significant macro-economic factors influenced the downward trend. “This price volatility is part of the market’s cycle,” he said.
“What is also important during this period is to ensure due care is taken, to make certain wool-growers are properly informed of factors influencing price and the price risk when selling.”
Australian Wool Exchange senior market analyst Lionel Plunkett also attributed the slashed market value to an absence of big auction buyers.
“Major auction players were again absent and those buyers that were active continually reduced their buying basis as they accumulated wool,” he said.
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