THE WOOL market has fallen slightly in recent weeks, but there are no anticipations that this is a permanent correction.
Following weeks where the Eastern Market Indicator (EMI) has been at record highs, in the last two weeks it has dropped a total of 79 cents per kilogram, finishing last week on 1751c/kg.
Australian Wool Exchange senior market analyst Lionel Plunkett said the fall is more of a “speed bump” than a correction.
“We had a reasonably sharp fall last week, which carried on from the previous week where it came off from its peak,” Mr Plunkett said.
“In technical terms, a correction is when it’s at 10 per cent or more, but we’re currently about four per cent off that peak, so we’re not overly pessimistic at this stage, it’s just more of a speed bump.”
He said the selection of wool on offer is likely having an impact on recent prices.
“The current selection is probably having some impact, the better types are less affected, but it’s just this time of year, the autumn period, where there’s more dust about, so there’s less stylish wool, which is highly sought after, on offer,” he said.
“The better types are doing better, they’ve still come off, but the lower specification types have come off a lot more, seeing a much sharper decline.”
He said there’s also been talk that exporters are currently facing financing issues.
“It was getting to a stage where exporters were finding it more difficult to fund their purchases, bearing in mind the cost of a container of wool nowadays,” he said.
Mr Plunkett said the falls are probably more a case of a fast-rising market having “a bit of a pause”.
“You’ll always have a series of rises, a strong run, then a bit of a pull back, and you’ll find that sellers and buyers will get used to a new level, and it will pull back to that level where people are comfortable, and then it will have another run,” he said.
“Passed in rates have not spiked terribly since these drops, currently at nine per cent, so on that basis, it would appear that sellers are reasonably comfortable with these prices levels.”
KareeWool owner Alister Carr said his woolgrower clients are still happy to sell wool at these “healthy prices”.
“We’ve had a slight retracement over the last two to three weeks, but to put things into perspective, the EMI is still at levels that are 15pc higher than last year,” Mr Carr said.
“While it’s pulled back from the very high point of a month ago, all of our client base is still very happy to be selling at current levels.
“Woolgrowers are very resilient people, but they’ll be worried about the next few years, and won’t become true believers [in the longevity of the price peaks] until they see two or three seasons at these current prices.”