Floods Lift Wool Prices in Australia
March 23, 2012
Wool prices jumped sharply last week with Australian Wool Exchange's (AWEX) Eastern Market Indicator rising 23 cents per kilogram (c/kg) to 1239c/kg clean.
While wool supplies have been tight for much of the current season, the situation has been exacerbated by AWEX's latest forecast of sale offerings of only 127,000 bales prior to a one-week Easter break.
Elders' National Sale Center Manager Simon Hogan said the floods and wet weather were not only delaying shearing but were also preventing deliveries from farms.
Although the 1239c/kg indicator is 131c/kg less than in the same week last year, the season average of 1227c/kg is 190c/kg better than the average for same period last year.
Gary Turner of wool exporter Kathaytex said the market was experiencing supply issues at both ends with low stocks in China and a fall-off in the Australian wool supply.
Despite predictions of a slightly larger clip of 355 million kilograms for 2011-2012, the latest Australian Wool Testing Authority's test data suggests the clip could be less than last season's 345 million kilograms.
Last week's strong market also coincided with activity in the forward markets. Simon Hood of Michell Direct said this activity reflected exporter concerns about supplies and prices through to Christmas.
Hood said a forward price for 21-micron wool at 1280c/kg for September delivery represented good value to producers.
Michael Avery, head of the Queensland Cotton's wool trading operations, said there will be price volatility over the next few months.
Reprinted in part from Weekly Times Now, AU