Woolgrowers eye US-China trade war dent
The State’s woolgrowers continue to tread with caution amid the mounting US-China trade feud, saying the two global powerhouses’ rift could further dent the Australian wool market.
Wool analysts have pointed towards the US-China trade war for the greasy commodity’s diminishing value this month, which included the Eastern Market Indicator dropping 163¢/kg in one trading week.
With the EMI closing 16¢ down at 1494¢/kg clean last Thursday, Great Southern wool pundit Alex Cant said woolgrowers remained wary of the escalating trade war.
Mr Cant, who farms at Kojonup-Broomehill with son Cameron and produced 200 bales this year after shearing in July, said he feared the dispute could have a further impact on international wool demand.
“There could be a bit more to play with China and America, which could drop the wool market again,” he said.
“What we’re hedging against is if it will fall further, or if it will rise — the market can crash quickly, but it can take months to rise again.”
Mr Cant’s comments come after Frankland River woolgrower Richard Coole last week estimated the US-China trade war would potentially strip the EMI of a further 200¢/kg.
At last week’s Melbourne and Sydney auctions, with Fremantle in a one-week recess, there was a 16.1 per cent pass-in rate of the 26,492 bales offered.
Mecardo analyst Olivia Agar said it showed confidence returning to market after the EMI lost 9.3 per cent of its value at the prior sale to mark the biggest weekly fall since 2003.
“Producers can take some relief knowing that the emergency status seems to have been called off for now,” she said.
“With the shock factor over, sellers were more accepting of this week’s prices and 16.1 per cent of the offering was passed in. This saw 22,216 bales cleared to the trade.
“For the season to date we’ve seen 46,628 fewer bales sold than the same period in 2018-19.”
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