September 16, 2011
The Australian Wool Exchange's Eastern Market Indicator (EMI) fell by A$20 cents (or 1.55 percent) this week to A$1,274 cents/kilogram clean. The local currency lost ground against a strong U.S. dollar (the exchange rate fell by 3 percent between Sept. 8 and Sept. 15) and, consequently, losses in the EMI when expressed in U.S. currency were more pronounced. In U.S. dollars, the EMI declined by US$71 cents (5.18 percent) to US$1,300 cents/kilogram clean, its lowest level since February.
The fall in prices has been attributed in part to a weakening in business confidence, associated with further nervousness on global financial markets over sovereign debt in the Eurozone. The lively demand that had proved supportive in recent weeks turned slightly more selective. Of the 45,020 bales on offer, 91 percent were sold. It is noteworthy that, despite the decline in prices, the pass-in rate this week remained relatively low. Chinese buyers were, as usual, the most prominent. European buyers, while being fairly selective, were not entirely absent, with competition forthcoming from the Czech Republic and Italy.
It will be interesting to note whether the weaker U.S. dollar equivalent prices attract sufficient demand in early trading next week to offset the potentially negative impact of an ample supply.
Reprinted in part from The Wool Record