Growers in powerful position

Growers in powerful position


Sheep
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FOLLOWING three weeks of steady falls, the Australian wool market has just seen its largest weekly rise in more than seven years.

FOLLOWING three weeks of steady falls, the Australian wool market has just seen its largest weekly rise in more than seven years.

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HIGH HOPES: Adam and Graham Wallace, Cowra, NSW, with fleece from Merino ewes, that they anticipate to sell for "record prices" in the next few weeks. Photo: Rachael Webb.

HIGH HOPES: Adam and Graham Wallace, Cowra, NSW, with fleece from Merino ewes, that they anticipate to sell for "record prices" in the next few weeks. Photo: Rachael Webb.

The industry’s benchmark, Eastern Market Indicator (EMI), increased by 80 cents week-on-week, to close at 1818 cents a kilogram, which is back near the record highs seen at the start of the year.

Adam Wallace, 'Melrose Pastoral', Cowra, NSW, with woolclasser Paul Ryan, neighbour Garren, and  semiretired) talking wool with the Wallace's neighbours, Garren and his father, Malcolm Wright, "Beulah", Cowra

Adam Wallace, 'Melrose Pastoral', Cowra, NSW, with woolclasser Paul Ryan, neighbour Garren, and semiretired) talking wool with the Wallace's neighbours, Garren and his father, Malcolm Wright, "Beulah", Cowra

Price increases were seen across the entire Merino spectrum, on the 39,582 bales that were offered nationally last week.

Mecardo managing director Robert Herrmann said the dips seen in recent weeks were buyers “taking breaths”, and not significant market corrections.

“We had seen quite dramatic moves in the market, with the market up quite significantly last year, with sales surging in December, and in January too, which was almost unexpected, so then we just saw that buyers were pulling back, and reassessing,” Mr Herrmann said.

He said last week’s recovery was “quite spectacular”, and credits it to the Australian dollar being down 2.23 cents, and general confidence in the market.

“I think there’s this underlying strength in the market that’s been building, which has momentum because there’s been such a long period of disappointment, and now we’re cycling into the strong phase of the market,” he said.

“And then given supply is low, there’s just not enough wool to feed into the buyers’ appetites.”

He said this price jump is significant given it’s occurring at the peak of the market.

“If this was happening when the market was at 1000c/kg, it would be a big deal, but not as significant as it is now,” he said. 

He said he never thought he would be able to say in any commodity market that the seller is able to influence the market, but at this point in time, he believes woolgrowers are in a very powerful position.

“When the market drops back even just a few cents, the passing rate goes up because growers say they won’t accept those prices, which takes supply away, and forces the market to come back up to attract growers into selling again,” he said.

“If you’ve got stacks of wool around, it doesn’t matter if the growers pass it in, because buyers can buy it somewhere else, but now the power is with the grower, because of lessened supply, so they can certainly influence how much wool is available to exporters.”

Cowra, NSW, woolgrowers Graham and Adam Wallace are anticipating to sell wool that was recently shorn, for “record prices”.

“I reckon [the sales] will go extremely well, through early valuations, it’s looking like it will be extremely rosey,” Graham Wallace said.

“There’s a shortage of wool at the moment, so buyers finally do need wool.”

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