Solid start for wool in 2013

17 Jan, 2013 03:00 AM

WOOL prices started 2013 strongly last week in the first post-Christmas auction with the Eastern Market Indicator up 39 cents a kilogram to post its highest price of the season at 1111c/kg.

The EMI is now 105c/kg less than the same week last year but is 41c/kg, or 3.8 per cent, higher than at the start of the season.

Buyers for China, India, Europe and Korea were active last week when 21-24M categories were up 42-46c/kg; 18.5-20M was up 49-54c/kg and 17-18M was up 40-45c/kg. Increases for wool coarser than 25M was variable, up 15-27c/kg.

In compiling his weekly summary, Australian Wool Industries Secretariat’s Peter Morgan said the organisation’s database showed the EMI had risen in the first January sale in 13 of the 14 years since 1999-00, when AWIS was formed.

“The largest gain was 121c/kg in January 2011 when the market started its rise to 1436c/kg in June of that year,” he said.

Independent wool consultant Michael Blake said one of the key factors influencing volatility at wool auctions was the volume of wool in the pipeline.

He said the average percentage of wool in stock in relation to its use in the past 20 years had been about 40pc – so for every 100 tonnes of wool processed, there was 40t bought and sitting in stock as greasy, top, yarn, cloth or knit ready to go to the next stage of the wool textile pipeline.

But now that percentage was only 11pc, compared to cotton where stock levels were closer to 70pc of used volumes.

This meant buyers were in the market on an ‘as needs’ basis – which made is nearly impossible for growers to pick the market’s peak.

Mr Blake said farmers could be cautiously optimistic about further increases in wool price but there would be continued volatility.

This was also because there was no increase in global wool supply. In the production forecasts, Australia was only supposed to rise slightly, Argentina was down 15 to 20pc, Uruguay, New Zealand and South Africa were down 2-3pc but did not produce large volumes of apparel wool.

“The world volumes of apparel wool exported in 2012 are around 10pc below 2011 and as we look towards 2012-13 season they will bottom out and maybe increase by 1-2pc depending on climatic conditions,” he said.

China’s economic growth was forecast to be better than it had been in 2012 but still not booming so no major demand spike was expected.

Mr Blake said he was a bit surprised the market surged as much as it did last week. But it often happened at the first sale of the year because of the need for supply for first stage processing after the Christmas break disruption.

“It is good for growers with the market at these levels as a starting point,” he said. “There is definitely a reason for optimism but it is not an advice to hang out for the peak of the market.

“It’s a ‘sell and repent but sell’ type of market. The market indicator value of $11/kg is a good price compared to 2012 when it averaged $A1090 cents.”

Demand for 23 micron wool was still particularly strong and prices had now spent three years at 1000-1300c/kg – a 50-year high in $US terms.

“We are seeing the influence of prime lambs on crossbred or halfbred wool volumes now. Twenty years ago, 85pc of the clip was finer than 26M, now it’s closer to 75pc,” he said.

Finer microns were a different picture, with 18M and finer only 50pc of their 20-year value. The demand for this superfine segment is increasing again but so is the availability of supply.

Date: Newest first | Oldest first


Tony Brann
18/01/2013 8:42:12 AM

Very good article by Michael Blake.


Screen name *
Email address *
Remember me?
Comment *


light grey arrow
Pleased that common sense has prevailed. Being close to the policy makers cannot be underestimated
light grey arrow
JohnCarpenter, The lamb and mutton job is going okay- we must be doing some things right.
light grey arrow
Spot on X. Let the Chinese buy as long as we can buy freely in China