AU Wool Market Moves Up as it Responds to Rate Cut
May 6, 2016

The Australian wool market is riding a two-week rally as the Australian dollar plunges by two percent in reaction to the Reserve Bank of Australia's interest-rate cut to a record low of 1.75 percent. Trading above 77 US cents early in the week, the dollar closed out the week at 75 cents, 1.2 cents lower than the previous Thursday.

Early trading at Sydney and Melbourne indicated a 20 cent hike on last week's Eastern Market Indicator to nudge 1260 cents per kilogram; although, due to the decrease in the Australian dollar, the rise of EMI in U.S.-dollar terms increased only slightly.

TechWool Trading remained the dominant buyer for the past two week, securing 15 percent of the national offering. Lempriere Wool climbed to second on the major buyers list in Melbourne, while China Tech dropped to seventh position.

TechWool wool buyer Stuart Greenshields said the northern market's rise of 40 cents on last week's sale was surprising and was due to reduced supply, increased demand and the lower Australian dollar.

"The dollar is becoming crucial - the U.S. price is what the Chinese are paying and that hasn't changed a lot in the past two to three weeks, so unless they lift their prices to follow the market, the currency will be driver," said Greenshields.

Last week's market closed 24 cents higher in Australian currency and 6 cents lower in U.S. currency at sales in Sydney, Melbourne and Fremantle.

Buyers for India continued to be dominant, with support from Chinese, European and Korean buyers.