Australian Wool Prices Continue Improving
July 8, 2016

Wool prices improved further this week, giving weight to the long-held belief of a relative global shortage of suitable greasy wool in front of machines or in stocks, Australian Wool Innovation said. In the first sale of the 2016-2017 wool selling season, the Australian Wool Exchange Eastern Market Indicator rose 23 cents to 1320c/kg clean, the best start to a season in 11 years. The increase comes on the back of rises during the preceding auctions, extending the rally to four weeks and pushing the EMI to a 12-month high.

The Australian Wool Innovation market report said the relatively large offering of 40,000 bales failed to dampen the enthusiasm of buyers or the continued demand for Australian wool. The gain in the EMI, when expressed in U.S. dollars is highly indicative of overseas users willing or having to support the Merino market at current price levels. The strength for Merino types was despite an almost 1-cent jump in the Australian dollar, magnifying the rises in U.S. dollar terms - the Australian and U.S. dollar exchange rate rose US85 cents to US75.24 cents.

The progressive increase in prices during the two days resulted in 21-micron wools jumping almost 50 cents clean for the sale and are now approaching 1500 cents clean (21-microns briefly hit 1500 cents in June 2015 but the most notable recent encounter at this level was in 2011 and the record for any 21 indicator is 1682 cents back in 1988).

A satisfying end to the wool selling year is widely expected next week with nearly 41,000 bales to be offered for the final sale prior to the annual three-week recess. It is anticipated that current interest in the Merino fleece offerings will continue and prices will remain solid, if not dearer. In all other sectors, a slight drift lower is expected as outstanding orders are filled with buyers not willing to carry stock over the break.