Western market indicator rebounds to 1921c/kg
The current Australian wool market has been given a super cycle rating, according to experts, and higher record prices are set to continue.
In a return to top form, last week’s Eastern Market Indicator gained back its record 1818c/kg high with an 80c/kg leap back to fame.
The Western Market Indicator lifted the most, up by 102c/kg to close at 1921c/kg.
National Council of Wool Selling Brokers of Australia executive director Chris Wilcox said the wool market roared back after three weeks of weaker demand and lower prices even while the world’s share markets suffered volatility.
He said the increased demand for wool was sparked by a US 2.25 cent drop in the Australian dollar.
“The EMI returned to its equalling record set in the first week of sales in January,” he said.
“Merino and crossbred wools all enjoyed a sharp lift in prices regardless of microns and even lower spec wools were in demand.
“The rise in prices for Merino wool over the past 18 months has been spectacular, both in the size and the duration of the lift.”
Mr Wilcox said the wool market experiences regular price cycles from trough to peak and then back down again.
“These cycles are driven by stocking and destocking decisions within the wool textile industry, reflecting a combination of factors including the length of the processing chain from raw wool to finished product at retail,” he said.
“Appropriate stocking quantity is reflected in purchasing decisions by garment makers, weavers, knitters, spinners and early stage processors in anticipation of orders from their customers and the imperfect information for these companies about how much product will actually be sold at retail.
Mr Wilcox said in the past, these normal cycles were around seven to nine months between trough to peak.
“Every so often we see a super cycle, one which goes for much longer and involves a much greater increase in prices,” he said.
“In the past 30 years there have been four such super cycles and I think the current market is the fifth.
“Of course, there is a downside to these super cycles.
“The past three super cycles have seen prices fall by around a third from the peak, but each time the low after the super cycle peak has been higher than the previous low.
“This reflects the steady upward rising trend we have seen for the EMI over the past 30 years.”