New record wool prices have been set this week, with unchanged supply and demand fundamentals continuing to support the market. Australian wool prices hit a 22-year record after the Eastern Market Indicator (EMI) rose 9 cents to 1384 cents/kilogram (kg) clean today.
The EMI rose by 20 cents/kg clean, or 1.47 percent, to hit 1384 cents/kg clean on May 26, marginally surpassing the previous record of 1383 cents/kg clean set on March 31.
In U.S. dollars, the indicator also hit a new record of 1464 US cents/kg clean, exceeding the record prices paid in 1988-1989 prior to the collapse of the Reserve Price Scheme in 1991.
Since the July 1, 2010, auction, the EMI has increased 54 percent in Australian currency and 91 percent in U.S. dollar terms.
Australian wool growers are enjoying a spike in demand and price for their product as supply is low and demand is high from export buyers. The late autumn wool market is defying the trend of cautious international buying by jumping 54 percent over the past year, at a time when the Australian dollar surged 20 percent in value.
East Australian wool broker Rowan Woods says the strong dollar is usually a deterrent to export buyers as it is widely considered to lead to high and uncompetitive prices for Australian agriculture. But when it comes to the world's main supplier of wool, he says Australian growers are the winners.
Reprinted in part from ABC Rural Australia