FINE wools which have underperformed gains experienced by the broader wool market are enjoying a time in the spotlight, driving the Australian Wool Exchange (AWEX) Eastern Market Indicator (EMI) to a celebrated 16 month high.
The EMI rose 13 cents to 1331 cents per kilogram clean last week as attention continues to be on the 17.5 micron wool thanks to a lucrative order for Chinese Government uniforms.
The order, which has strengthened demand for fine wool since June, supported last week’s price increase which was between three and 22 cents, with the best growth for lots below 20 micron.
National Council of Wool Selling Brokers of Australia chief executive Chris Wilcox said superfine wool was now at multi-year highs.
Mr Wilcox said the 18 and 18.5 micron price guides were at the highest levels since September 2011 at 1636 and 1615c/kg clean respectively.
“The recent increase in the price for superfine wool has lifted the price differential for 18 micron wool over 21 micron wool to 17pc – the highest since November 2011,” he said.
This compares with an average of just 9.3pc price differential between 2012 and September 2016.
The Australian dollar rose against the main trading currencies, climbing US29c higher to US1022c/kg – the highest level since June last year.
By region, the Western Market Indicator showed the most dramatic gains, up 16 cents to 1391 c/kg clean while the Northern Market Indicator climbed 13 cents to 1372c/kg and the Southern Market Indicator 14 cents to 1305c/kg.
Mr Wilcox said the EMI’s climb began at the start of 2016, from 1265 c/kg at Christmas 2015 to 1331c/kg this week.
“The current level is at the highest point for much of the past five years, with the exception of mid-June last year when prices spiked temporarily,” he said.
“The current increase appears to be sustainable.”
Supporting prices was another low offering week with just offering 34,556 bales due to wet conditions hindering spring shearing.
Len Tenace, of Segard Masurel, said the wet weather had increased the volume of unscourable coloured wool and fleeces with higher mid-breaks.
“Because of the delay in shearing, the wools’ staple length and mid-breaks are now outside some customers’ parameters,” Mr Tenace said.
“The optimum wool staples for Indian types would be 108 millimetres and 95mm and tighter for the European types but we’re seeing the length of the wools be pushed out in excess of 110-120mm.”
He said the low supply had reached a “hand to mouth” level due to limited reserves for woolbrokers and Chinese processors.
“With the low stock levels in China in particular, that is absorbing whatever wool is in the marketplace and that is why we’re seeing these spikes in prices,” Mr Tenace said.
“We’re expecting to see a lot more wool come on the market as the weather warms but we’ll see a lot more out of specification wool too.
“In the end it’s the consumer that needs to accept the increase in prices and the signals of late are that end users don’t want to be paying these prices.”