AWI cal­cu­la­tions short

Warwick Daily News - South West Queensland Rural Weekly - - Column - James Wagstaff news@ru­ral­weekly.com

AUS­TRALIAN Wool In­no­va­tion has been caught short with its cal­cu­la­tion of this sea­son’s wool prices.

In its an­nual re­port last week, the re­search and mar­ket­ing body said it based its in­come fore­casts on an av­er­age East­ern Mar­ket In­di­ca­tor of 1650c/kg in

2018-19, sig­nif­i­cantly shy of the 1900c/kg fore­cast by ABARES and 1850c/kg quoted by AWI to a meet­ing of wool grow­ers this month.

It also dif­fers from the

1700c/kg av­er­age pro­jected in WoolPoll vot­ing in­for­ma­tion sent out to grow­ers in Septem­ber and is 20 per cent down on cur­rent mar­ket trend­ing.

For the first 14 weeks of

2018-19 sell­ing sea­son, the EMI has av­er­aged 2025c/kg and for it to meet AWI’s

1650c/kg it would need to av­er­age 1480c/kg for the re­main­ing 31 weeks.

Some grow­ers say that to reach 1650c/kg the in­di­ca­tor would have to dip below

1100c/kg — to prices sim­i­lar to those achieved in 2015.

But an AWI spokes­woman said dis­cus­sions for the

2018-19 bud­get took place in April this year.

She said AWI reg­u­larly re­viewed the bud­get based on the EMI “how­ever this doesn’t mean the or­gan­i­sa­tion is bank­ing on this fore­cast”.

“Prices have been par­tic­u­larly volatile in re­cent years.

“Whilst it is clearly not that easy to ex­plain or pre­dict why mar­kets of any prod­uct re­act in the way they do, on the sur­face the cur­rent wool mar­ket be­hav­iour seems to be go­ing against the most log­i­cal of think­ing,” the spokes­woman said.

“Sup­ply is fore­cast to be in se­ri­ous de­cline and de­mand for wool prod­ucts, in par­tic­u­lar Merino, at re­tail and con­sumer level re­mains strong, yet the mar­ket has taken this down­turn.”

In March, when the EMI was at more than 1800c/kg, AWI chief ex­ec­u­tive Stu­art Mc­Cul­lough de­scribed the wool mar­ket as “a boom, all right” and said he didn’t see “any rea­son it would slow down soon”.

The EMI last week fin­ished at 1874c/kg — down 96c/kg in a week and al­most

250c/kg shy of the record

2116c/kg achieved in mid-Au­gust.

Na­tional Coun­cil of Wool Sell­ing Bro­kers of Aus­tralia ex­ec­u­tive direc­tor Chris Wil­cox said there was cur­rently some neg­a­tive sen­ti­ment from Chi­nese woollen mills amid con­cerns about a flag­ging do­mes­tic econ­omy and re­tail sales, which was hav­ing a “knock-on ef­fect” on Aus­tralian wool prices.

Syd­ney’s 17-mi­cron in­di­ca­tor took the big­gest price hit last week, los­ing 161c/kg, while Mel­bourne’s bench­mark 19-mi­cron in­di­ca­tor shed 83c/kg.

PHOTO: CHANTEL RE­NAE PHO­TOG­RA­PHY

MISS­ING THE MARK: AWI has been caught short with its cal­cu­la­tion of this sea­son’s wool prices.

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