AU Wool Lower - Fine Wools Strong

May 30, 2008 - Reports indicate that the Australian wool market is lower. Last week, the market dropped to its lowest point since August last year, with the eastern market indicator (EMI) falling 21c/kg, to 869c/kg. The EMI has now fallen 15 percent since its January highs. This is the time of year, however, when the lower quality wools arrive to the Australian markets.

However, in U.S. dollar (US$) terms, the market actually rose last week, up by US7c, to US 836c/kg, with the Australian dollar (A$) lifting above US96 cents.

Also on a positive note, Australian fine wool demand, as indicated by 18- and 19-micron wool auction sales, has been unprecedented in recent years. The value of 18- and 19-micron wool sold at Australian auction is set to break a new record in 2007-2008, surpassing half a billion US$ for the first time in one season.

For the 2006-2007 season, the value of all 18- and 19-micron wool (17.6-19.5 micron) sold at Australian wool auctions reached US$495 million. Already this season (to the end of April), the total value of these wools sold at auction is US$485 million, meaning for the full season, 18- and 19-micron wool sales will easily surpass US$500 million for the first time.

Combined, the value of 18- and 19-micron wool sold at auction in the 2006-2007 and 2007-2008 seasons will reach close to US$1.1 billion. This compares with the 2001-2002 and 2002-2003 seasons when the combined value of sales was US$700 million.

This average growth of around US$200 million over the last four to five years, confirms that fine wool demand has continued to grow strongly.

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