October 26, 2012
The wool market continued its positive theme this week with a rise of 4.4 percent, following a trend that started three weeks ago. A stronger Australian currency failed to dent the momentum and, in U.S. dollar terms, the Australian market closed 52 U.S. cents higher for the week.
Europe emerged as the dominant buying force with additional strong support from Chinese and Indian buyers.
The Australian Wool Exchanges Eastern Market Indicator (EMI) increased by AUD$1.10 over the past four sales. The week closed with the EMI hitting 1,048 Australian cents/kg (clean), its highest level since July 12. In U.S. dollar terms, the EMI rose to 1,085 US cents/kg (clean), up 20 cents on the previous day's sale.
Fine wools continue to head towards a more normal premium with the basis separating 18.5 and 21 micron having risen from its autumnal low of circa 50 cents to a more respectable 123 cents this week.
Reaction from overseas markets was relatively positive this week with evidence of some large orders coming onto the market from spinners who had previously held back waiting for either lower prices or who have simply been waiting for more certainty from downstream.
In such an optimistic climate, wool growers are bringing out wool from stock to catch the high prices. No one is expecting the market to suddenly fall away. While a question mark still remains over demand, lower quantities could continue to put pressure on the market until March and April when more wool is offered.
New Zealand and South Africa markets also experienced this upward trend in wool prices over the last few weeks.