A whopping $97.4 million worth of wool was sold at auction last week, the fourth highest weekly total since records began in 1996.
This total was achieved on the largest bale offering of the season, 54,409 bales, which is up almost 10,000 bales on the previous selling week, prior to the Easter recess.
Despite this larger offering, the market still performed well, with the industry benchmark Eastern Market Indicator (EMI) closing at 1776 cents per kilogram, four cents more than the previous selling week, and the southern indicator closing at 1732c/kg, unchanged on the previous week.
The passed-in rate was down 1.7 per cent on the previous week, at only 6.1pc.
Australian Wool Exchange senior market analyst Lionel Plunkett said the impressive $97.4 million total was inevitable given current market prices and the influx of bales offered.
Mr Plunkett said these prices would be putting pressure on exporters’ finances.
“When you’re paying the amount they’re paying for wool, a container of 108 bales is going to cost $300-$350,000,” Mr Plunkett said.
“When you compare that to a couple of years ago, where it cost about $200,000 per container, it’s significantly higher.”
Fox & Lillie was one of the main buyers at auction last week, and managing director James Lillie said exporters and overseas clients had to adjust to these new levels.
“To a certain extent, this is the new norm. We’re going to get some volatility, but we’re confident these prices are here to stay,” Mr Lillie said.
He said despite the high volume offered last week, buying was no different to previous months, where prices have been at record highs.
“The prices have been high for a number of months now, so whether that particular week was anything special, I don’t think so, it’s just another big week,” he said.
He said these price heights weren’t sudden, so haven’t caught exporters by surprise.
“The industry has had to find money at a time where it can be difficult to find money,” he said.
“You increase your requirements to a certain rate, and then the wool prices go up faster than that. It’s challenging for business but many of us have got through it and aren’t in bad shape.”
This season 1,523,465 bales have been offered, which is down 0.6pc on this time last year.
This is strikingly different to December 2017, when the total number of bales offered was 5.5pc higher than the same time the year before.
Mr Plunkett said this was evidence of how significant numbers had deteriorated since Christmas.
“There are plenty of factors that could have influenced this. It could be seasonal, and it could be related to the market not being as strong as it was prior to Christmas when a lot of people were probably trying to get their wool out there,” he said.
He said although the market recorded an overall positive movement, there were still losses felt.
“It’s a bit of a two-speed market at the moment, the better types are going quite well, and some of the lower specification types are not performing as well,” he said.
This week, Australian Wool Innovation will release its latest production forecast, which in December last year predicted wool production would be up 1.4pc, offering 345 million kilograms.
Joely Mitchell
Joely started her career at Stock & Land as a cadet journalist in 2016. She is now the editor of the paper.
Joely started her career at Stock & Land as a cadet journalist in 2016. She is now the editor of the paper.
