Wool shrugs off Japan disaster

Concern about Japan’s nuclear crisis affecting the Australian wool market last week abated when the Eastern Market Indicator (EMI) continued its climb into uncharted territory, closing at 1370 cents.

AWEX said the 22c EMI gain was despite jittery stock markets and exchange rates which reacted to the devastating earthquake, tsunami and nuclear crisis.

“Locally, the Australian dollar plunged 2.6c against the US dollar and briefly hit a three-month low at US97.02c last Thursday,” AWEX said.

WA woolgrower Des Haywood, of Goomalling, said he was pleasantly surprised the market kept going when he watched his Bali-Hia clip sold last week.

“We received the most consistent prices ever, but I did have some hesitation before the sale that it was going to be a different story after tragedy struck Japan ,” Mr Haywood said.

The woolgrower’s 21 micron offering reached a top of 847c/kg greasy as medium micron wool continues to gain on the finer types since the start of January.

Gnowangerup woolgrower Mike Lance also realised excellent prices for his Cwmavon clip which sold to a top of 1491c/kg greasy for eight bales of 17.6 micron wool.

Both growers had their sons with them and it was mutual between the two young men that sheep were definitely the way to go in these times of higher prices.

However, their fathers’ concerns about the latest crisis to hit overseas buyers should not be overlooked.

National Council of Wool Selling Brokers executive director Chris Wilcox said Japan was very important as a consumer of wool.

“It is the world’s second largest consumer country for wool clothing, notably men’s suits,” he said.

Mr Wilcox said Japan accounted for 22 per cent of all of China’s exports of wool clothing in 2010 and was the second biggest importer of China’s wool woven wear.

Japan also is the eighth largest market for Australian raw wool, taking 2.36 million kilograms (equivalent to 13,500 bales) or 1.2 per cent of exports, worth $15 million.

“It is too early to say how big the impact of the disaster will have on demand for Australia, but it will be negative,” Mr Wilcox said.

“We could see a build-up of wool stocks in China’s textile industry.”

Japan’s economy may drop by one per cent in 2011, according to the Centre for Economic and Business Research.