Woolgrowers cautious amid ‘outside factors’

Zach RelphCountryman
Kojonup sheep farmer Steve McGuire.
Camera IconKojonup sheep farmer Steve McGuire. Credit: Daniel Wilkins

Australia’s wool market shone bright last calendar year, with farmers enjoying record highs on the back of strong Chinese demand.

However, ahead of the upcoming spring shear, wool producers across WA are treading with caution around the volatile commodity’s topsy-turvy prices.

The Eastern Market Indicator dipped 8¢ to close at 1952¢/kg last week.

The Western Market Indicator recorded a significant drop, falling 31¢ to 2062¢/kg.

Although the benchmark EMI remains well above the 1300¢/kg it had been exchanging hands at in early 2012, Kojonup wool producer Steve McGuire is reluctant to forecast a bullish outlook.

Mr McGuire, who oversees a 9000-strong flock at his Great Southern property, said international influences would continue to play a significant role in Australia’s wool market.

“Wool is one of the most volatile commodities in the world,” he said.

“The fundamentals of the wool trade are still reasonably sound, but outside factors will dictate the price.”

The aftermath of the Eastern States’ drought continues to take its toll and has driven wool yields and quantities down, according to the Australian Wool Exchange.

Last week, bale offerings reduced to 32,801 bales from 43,053.

AWEX senior market analyst Lionel Plunkett noted a year-on-year decrease in offerings, with 2014,381 fewer bales offered — 12.1 per cent down.

“Despite the reduced quantity, buyer activity could best be described as cautious and many exporters adopted a wait-and-see approach,” he said.

“The result was a continually softening market, that by the end of the series meant that prices had been generally reduced by 15¢ to 40¢, when compared to the previous week.

“Some off-style and inferior types struggled for buyer attention and were up to 50¢ to 70¢ cheaper.”

Increasing Chinese demand for luxury goods spurred the Australia’s record wool price in 2018, which held steady at more than 2000¢/kg from August.

At the time, the wool price was at its highest point since 1990.

Yet, it remained far from the 1987-88 season’s record wool value, of about 2612¢/kg, when compared to the 2017-18 dollar.

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

Sign up for our emails