Wool prices continued to fall last week, following the previous weeks strong correction.
Confidence remained low across most industries, with Thursday seeing the ASX’s worst day of trading in 18 months.
This was reflected by the EMI, which finished the week at 1513c, down 163c or 9.73%. In USD terms this equates to 1026c, down 109c.
It was reported that this week saw the highest weekly fall since 2003. Interestingly, the current EMI of 1513c remains 17c above the 5 year average AUD EMI of 1496c.
Whilst price falls have been dramatic, recent record high prices have allowed for falls to be so extreme.
A looming trade war was the main driver of negative sentiment, with prices dropping dramatically across all microns.
The week finished with a 28.6% passed-in rate for the 45,000 bales on offer. Reports from the physical sale suggested confidence had diminished off the back of a slowing global economy.
The weakening Aussie dollar did little to boost export activity, as consumer demand for premium products continues to drop in the face of economic uncertainty.
Manufacturers have begun to slow down production in anticipation of this. 20 – 21 micron wool saw the largest drops, being the most popular amongst these mills and manufacturers with prices falling over 200c for the week.
Finer wool grades demonstrated the most resilience, with 17mic wool dropping by 117c in Sydney to finish the week at 2000c.
With prices dropping and no clear way to pick where its heading, many growers have withdrawn lots prior to auction, reducing turnover.
Specifically, 16.7% of lots were withdrawn prior to sale, significantly reducing the expected offering. This week will see 33,696 bales go to auction across Melbourne and Sydney.
Looking online, AuctionsPlus has 8,600 bales on offer, with almost half of those arriving online in August. Perhaps in this circumstance growers are looking to set their own reserves, in rejection to current market prices.
-Matt Cotton, AuctionsPlus