The Australian Wool Exchange's Eastern Market Indicator (EMI) breached 1,400 Australian cents per kilogram (cents/kilo) clean on Thursday for the first time in its 31-year history and rose further on Friday, hitting 1,420 cents/kilo (a rise of 22 cents or 2 percent from a week earlier).
Aside from its latest upsurge, the previous record high was 1,332 cents/kilo, established on April 22, 1988. Since then, the EMI has only exceeded 1,000 cents/kilo on a couple of occasions, in 2002/03 and 2007/08.
The Australian currency lost modest ground against the U.S. dollar this week, but the EMI expressed in U.S. currency remained above 1,500 cents, at 1,502 cents/kilo clean, some 96 percent higher than at the beginning of the season. The comparable increase in local value terms is 58 percent.
Crucially, strong buying interest has been sustained this week, against a very limited offering. Observers suggest that the perception that the tight supply will not ease until late August/early September is persuading buyers to cover their foreseeable requirements, even at the elevated prices asked. China has remained the dominant buying presence, seeking out mid-micron fleeces in particular.
Confidence among Australian sellers has been buoyed by the fact that buying interest has not faltered and sentiment among sellers remains distinctly bullish.
Reprinted in part from The Wool Record Weekly