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wool Market Report 1 June 2007
1 Jun 2007
Could this be the top?…
- This week again the market lifted strongly on Wednesdays sale. However, week on week the wool market is dearer in the finer end, but yesterdays sale saw the majority of micron categories ease by up to 25 cents.
- Effectively the market had to slow down eventually, as it cannot increase at this pace forever. Recently the wool market has been increasing at least 20 to 50 cents week on week.
- Supply concerns, especially now we are nearing the end of the season, coupled with some urgent demand (for physical wool) has driven this market to these highs.
- Unfortunately the forward markets are not showing the same enthusiasm. Forward prices beyond October have lifted slightly but not to the extent of the physical market. End users of wool are showing strong reluctance to set a program and buy wool forward, opting to purchase on a “as needed” basis in anticipation of price falls.
- Market analysts are still bearish for the new season, predicting the market to ease. Although supply will be down on last year, pipeline stocks have increased, and the relatively expensive cost of wool compared to other fibres has seen wool / synthetics and wool / cotton blends increase with cheaper alternatives.
- In US dollar terms the EMI has reached over 800 US c/kg, the highest level since the Reserve Price Scheme ended in 1990/1991.
- The Australian dollar has lifted this week to trade back over the 82.5 us cent level, and is now attempting to break through the 83us cent level again.
- Major auction buyers this week were Techwool (6,117 bales), A.S. Gedge (5,839 bales), and Modiano (2,453 bales).
- Wool sales resume next week in Sydney, and Melbourne only over 2 days with a total offering of almost 33,000 bales.
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For further information on the wool industry email Landmark or see the Landmark website.
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by Peter Tustin
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