Wool’s continuing price rise may be starting to sound like a broken record, but it’s music to wool producers’ ears.
At the end of last week, just two per cent of the 18,446 bales offered were passed in, finishing a 1943c/kg smashing through the 1900/kg clean barrier.
For consecutive weeks now, the indicator has risen over 50c and the gain of 52c/kg clean this week has seen average wool values jump by six per cent. The once unthinkable, 2000c/kg, is now in sight.
Western Australia showed the way it was done with the Western Indicator (WI) becoming the first Australian regional wool market indicator to smash through a national $20 a kilogram barrier last week settling on 2018c/kg clean, an increase of 66c for the week – an all time high.
Lionel Plunkett, Senior Market Analyst, Australian Wool Exchange (AWEX) said although the EMI is at record levels, it is not across all microns, with the finer end not reaching the record numbers just yet.
“Certainly where all the action has been recently is the 19.5 and broader microns, they are at record levels,” he said.
“Where it is not at records is 19 micron and finer. They rallied a little earlier, but there is not a massive premium per point of micron.
“Don’t get me wrong they are still going well in historical terms, just not at record levels.”
Buyer competition for last week’s offering was intense from the onset causing immediate price gains of 30 to 50c across the entire offering. Prices didn’t just edge up, they opened stronger on both days by 30c/kg then pushed to the higher levels.
All microns lifted across the states except 32.
The highest jumps were 23 and 24 micron which both lifted 63c/kg to finish at 2092 and 1945 respectively, while 21 micron lifted 60c/kg to finish at 2138c/kg.
At the finer end of the scale 18.5 and 19.5 micron lifted 42c/kg to finish at 2293c/kg and 2186c/kg respectively.
This week’s offering of bales is just under 32,000.
Mr Plunket said the shorter supply is what will be helping the market along.
“As well as the ‘the trend being your friend’ certainly in play, it should continue to rally,” he said.
“But on the way up we had a couple of hiccups and a couple of pauses. If we had one of those in the next few weeks, it wouldn’t surprise me.”
He said it would not be until the close to the spring flush that will test the fundamentals of the market about how much demand is there.
“But having said that, the supply has been reasonably consistent over the year,” he said.
“Once upon a time there was a lot of wool that used to come in that period, but it is a lot more consistent now, the flow into the market is a lot more even.”
He said the reasons for that are shearing patterns and grower behaviour.
“Six and eight month shearing practises are allowing a more consistent supply,” he said.
“I think growers too are averaging out how they are feeding their wool onto the markets.
“This is a real positive because it gives buyers consistency all year.”
The EMI has now risen 167 cents over the past five sales and year to date this season has averaged 1695 cents.
Maybe more importantly the outright price trading is now 10 to 20 per cent above last spring auction levels and has roughly doubled over the last five years.
The highest average in the late 1980s wool boom was 1003c in 1987/88.
Northern region breaks through the $20/kg barrier
The northern region market indicator broke through the 2000 cent barrier at 2014c/kg clean.
The highest jump was in 19.5 micron lifting 41c/kg, but most microns gained another 30c/kg.
The Freemantle fleece market continued its journey into unchartered territory opening 20 to 50 cents dearer with the indicator finishing on 2119c/kg.
Southern markets closed at 1929c/kg up 19c/kg with the EMI finished at 1962c/kg, up another 19c/kg.
Timely milestone with Australian Wool Week 2018
From May 23 to June 24 Australia will celebrate The Woolmark Company’s Wool Week for 2018. It’s a timely celebration considering the current jubilant state of the market.
The spotlight will be on woolgrowers, fashion designers, retailers and consumers.
With Australia producing 90pc of the world’s fine apparel wool suitable for the high-end fashion market, it’s no surprise that some of the country’s biggest labels and retailers are throwing their support behind the campaign and using an increasing amount of Merino wool within their collections.
Thirty-nine Westfields across Australia and New Zealand will be releasing a wool-focused winter campaign in time for Wool Week celebrating the growers who produce the fibre and the designers who use it.
Nine Westfield centres will host exclusive events and activations including extreme knitting workshops, visual merchandise displays showcasing retailer wool product, interior design workshops, and fashion exhibitions.