March 16, 2007
March 16, 2007 - Wool prices in Australia are trading near a four-year high on fears that drought will reduce supplies.
"What's driving the market is fears for supply and the downturn in quality of supply with the usual drought effect," Stephen Hill, trading manager for the ABB Grain wool unit, said.
Wool prices rose 33 percent last year and are up 15 percent this year, as an El Nino-driven drought curbs production.
Earlier this month, Woolmark chief economist Chris Wilcox said supply would get tighter in the next few months.
Prices reached A$9.64 a kilogram (US$3.36 per pound) on March 14, the highest since April 29, 2003.
Australia's wool production, already the lowest in 50 years, may fall further to 421,000 tonnes (464,073 US tons) in the year ending June 30, Australian Wool Innovation said.
Hill said some fabric makers were substituting synthetic fibers because of the higher prices. He said prices may fall next week should the amount of wool offered for sale be greater than expected.
"It's just so fickle the market, any increase is enough to give a buyer an excuse to pull back," he said. "If they wait a few days you may get an exporter to sell you something a bit cheaper." Staff contact: Rita Kourlis Samuelson, ext. 29