No easy answer for market fall
As the Australian wool market continued its downward trend last week, with all regional indicators experiencing big falls, analysts are at odds to explain the reason.
Australian Wool Industries Secretariat's Peter Morgan said it was difficult to assess how much of the fall could be attributed to global financial issues and how much was due to a real decline in demand.
"Only three weeks ago, analysts were talking optimistically of the outlook for wool in the short term, but with some possible volatility," Dr Morgan said.
The AWEX regional indicators finished 3.3 per cent lower last week when the US exchange rate fell by 2.2 per cent.
"Despite the falls in recent weeks, the EMI remains at historically very good levels and 30 to 40 per cent above the same time last year," Dr Morgan said.
"Global concerns include will Greece default or not?"
The National Council of Wool Selling Brokers of Australia executive director Chris Wilcox said the decline in prices was not confined to wool, with other commodities also experiencing sharp falls.
He said US wheat had dropped by 11 per cent, US corn was down by 12 per cent, sugar was down by 16 per cent, copper prices down by 18 per cent, nickel prices fell by 15 per cent and Australian wool had fallen 14 per cent (with superfine wool down by as much as 24 per cent).
"Cotton prices have done better, falling by just 5 per cent, although there had been significant drops in the April to June period," Mr Wilcox said.
He said the World Trade Organisation (WTO) had revised down its forecast of world trade as a result of uncertain outlook for the world economy.
"The WTO now expects world trade to grow by 5.8 per cent in 2011, compared with its previous forecast of 6.5 per cent," Mr Wilcox said.
On a positive note, Mr Wilcox said the WTO believed growth could pick up if policy makers devised a solution to the debt crisis that restored confidence in the financial system.
At last week's Wool Selling Centre in Bibra Lake, Babakin woolgrower Peter Negri and his son, Ben, offered 67 bales from their annual clip.
"We are pleased to have kept our sheep and today's prices should be up on last year," Peter said.
The Negri family run 1500 Claypans-blood breeding ewes on their 60/40 crop and Merino mixed farming enterprise.
Their top line of four bales of 18.9 micron fleece sold for 864c greasy on Thursday.
National wool sales this week have 48,182 bales rostered for sale.
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