Following an exceptional week for the wool market, the Australian Wool Exchange's Eastern Market Indicator (EMI) rose by 78 cents to 1,268 U.S. dollars per kilogram clean. This is the highest level the EMI has ever achieved in U.S. currency, an increase of 35 percent from the previous record set before the start of this season at 940 U.S. dollars per kilogram clean.
In U.S. dollar terms, the EMI has been at record-breaking levels since Nov. 4. In Australian dollars, the EMI closed 1,255 cents per kilogram clean, up 60 cents per kilogram clean on the last sale held on Jan. 27.
This is the highest-ever level for a closing EMI. Since the beginning of the year, the EMI in Australian dollars has increased by 224 cents (21.7 percent). The value of the Australian dollar rose from 99.6 U.S. cents to 101 U.S. cents this week.
Buyers for China dominated sales, driven by strong competition from Europe, India and Taiwan. Experts suggest these buyers for China were also encouraged to purchase Australian fleece following continued export restrictions on South African wool associated with Rift Valley Fever.
Analysts attribute this week's exceptional prices to the small offering, which put pressure on buyers. As woolgrowers found the market too strong to ignore, buyers were aware there will be little wool left on farms or in storage over the coming weeks. Sale room competition may have also been heightened by concerns surrounding delays in shearing and transportation.
According to experts, the market is unlikely to slip, but if it did, it would only involve a minor correction. They do, however, expect the smaller offering and export restrictions on South African wool to contribute to the strength of the market, which has already produced some the largest short-term rises ever seen.
Reprinted in part from the Wool Record Weekly