Confidence rise helps lift market

Headshot of Bob Garnant
Bob GarnantCountryman
Email Bob Garnant
The West logo

Improved global economic confidence on the back of the smallest wool sale of the season realised a gain of 1.4 per cent in the AWEX regional indicators at last week's wool markets.

While there are still serious concerns about the credit rating down grading of major banks in the Euro-zone, some relief was attributed to success of the pro-austerity parties in Greece, according to Australian Wool Industries Secretariat's Peter Morgan.

"The market opened on the strongest note since the first week of May and before Greece's inability to form a government," Dr Morgan said.

"It was one of the few times that the Eastern Market Indicator (EMI) has moved up in US currency this season."

He said the US exchange rate rose by 2.1 per cent which was a change in the EMI in US currency of 3.6 per cent.

"There were small gains across all Merino micron ranges and types on Wednesday, particularly among the finer wools," Dr Morgan said.

"This was followed by further gains on Thursday when the greatest gains were recorded from 17 to 19 microns."

He said the gains were achieved despite a significant strengthening of the US exchange rate, which remained above 101 cents until Thursday.

Trade reports indicated there was some good wool on offer, which attracted strong competition.

"The lift in the market had a buoyant effect on sellers, resulting in a fall in pass-in rates to less than half of the previous week's levels," Dr Morgan said.

As the WA market was in recess, the national offering of 21,569 bales cleared 20,261 to the trade.

The Landmark Wool Weekly report said short supply of wool globally had been propping up prices despite the weak demand.

"The uncertainty about the Euro-zone and pessimism about the world economy has resulted in sharp declines in commodity prices, including fibre prices such as wool and cotton," Landmark said.

The National Council of Wool Selling Brokers of Australia executive director Chris Wilcox said wool had performed better than cotton since early May.

"The EMI has fallen by 9 per cent in $A and 10 per cent in $US, while cotton prices are down by 16 per cent in $US," Mr Wilcox said.

He said the same could be said over the past year - the CotLook A index was down by 37 per cent while the EMI was off by 28 per cent.

Sales will be held in Sydney, Melbourne and Fremantle this week, with 29,269 bales rostered.

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

Sign up for our emails