Australian wool prices have reached their highest levels in terms of U.S. dollars in 20 years. Following an exceptional week for the market, the Eastern Market Indicator (EMI) rose by 69 cents to 995US cents/kg, the highest rate ever achieved. In Australian dollars, the EMI closed today at 990 cents/kg clean, up 41 cents/kg clean on the last sale held on October 28.
The week's strong Australian wool sales saw the EMI rise on Wednesday by 38 cents over last week with a low pass in rate, reaching the highest level of the season. The pass in rate indicates wool that is not sold because the desired price has not been reached and is left to be resold at a future auction.
The value of the Australian dollar rose from 97.5US cents last week to 100.5US cents today. Over the last three weeks the EMI has risen by 83 cents in U.S. dollars and 62 cents in Australian dollars. EMI is now higher in U.S. dollars than the Australian currency, as the exchange rate in Australian dollars is over parity with the U.S. dollar.
Paul Swan, Ph.D., market intelligence and trade reporting manager for Australian Wool Innovation Limited, said the addition of the major emerging consumer market in China to traditional markets in Western Europe, North America and Japan was starting to be reflected in wool prices.
Experts predict there will be an inevitable correction since the current level of the market is considered unsustainable. It is also expected that the quantity of wool available on the market will increase as woolgrowers release stored wool to take advantage of the rising prices.
Reprinted in part from AU Stock and Land