Western mar­ket in­di­ca­tor re­bounds to 1921c/kg

Countryman - - WOOL - Bob Gar­nant

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.”

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