A wool buying company said falls in wool prices in mid-May followed declines in the global finance market. The price of wool ended negatively, with the benchmark indicator, the Australian Wool Exchange-Eastern Market Indicator, falling 34 cents to 1121 cents per kilogram clean.
New England Wool's Andrew Blanch said the ongoing problems in Greece and lower global confidence saw some big falls in the finer-wool categories. Australia's falling dollar is also being blamed for the wool auction's biggest drop in nine months.
The market fell 36 percent for finer wools in Sydney the week ending May 18 as the dollar fell below one U.S. dollar.
Broker Rowan Woods, from Jemalong Wool, said the largest Chinese interests are not buying, as they speculate wool will be cheaper if the dollar falls further. "Once the Chinese decide they want to sit and wait, which is obviously what they have done, we are going to see that sort of impact on the market, remembering over the last 12 months we had the best year we have had market-wise for 20 years."
Woods said the market has been held up by the low supply of wool, "We are 60,000 bales behind this time last year."
However, the falling dollar is the trigger for the buyers to hold off buying for a time period, to see if the dollar will stabilize around the 99-cent mark.
Wood said the demand will remain subdued until the buyers get a solid signal that the dollar is not going to drop further.
Reprinted in part from ABC Rural, Australia