When the last week of the wool selling calendar closed last week, it left behind a stunning performance in it’s wake.
Although the AWEX (Australian Wool Exchange) EMI (Eastern Market Indicator) declined 17 cents for the week, closing at 2056c per kilogram clean, year on year the EMI improved a substantial 531c/kg or 38.8 per cent.
And in contrast to 2017, this year has brought about increases not only fine and medium wool, but also across coarse wool categories.
Lionel Plunkett, market information manger, AWEX, said based on the trend of the exports, he estimates the auction turnover would be the largest in 20 years.
In 1998 auction turnover tracked at $1.6 billion, but in 2018 the auction turnover shows a massive jump to $3.43 billion.
Mr Plunkett said the drop in last week’s EMI wasn’t a huge surprise.
“On the way up it very rarely just keeps going up in a straight line. I think a lot of people were expecting a bit of a pullback,” he said.
“Even if it comes back a couple of dollars it wouldn’t be a bad thing. It would be hard to take initially, especially if you missed out on the peak by a couple of weeks.”
But he said all the talk from the exporters at the moment is, with the shortage at the other end, they are still going to need wool.
A new characteristic emerging from 2018 trading thus far has been the strong performance of coarse and cross-bred wool.
Since early this year, gains in the EMI have been shared between the fine, medium and coarse ends of the spectrum.
However, coarse wool prices are coming off historic global lows indicating that there is considerable room to grow.
Mr Plunkett said he expects the broader end to be well supported because there is very little of it around.
“If there is a decline in the market genrally, it could come down to individual microns,” he said.
“Given the seasonal conditions, there is a fair bit of fine wool around. We might start to seen a bit more of a separation and a bit more discounting with some of the lower styles in those finer microns.”
But amongst all the highs, there is a low, that being quantity.
This week there are 15.5pc less bales offered then at the same sale last year. In addition, next week, the final sale prior to a three week recess in sales, there is 21.6pc less bales to be offered than the week two sales of July 2017.
Mr Plunkett said traditionally a lot of people hold off to sell their wool in the new financial year, but this year’s figures are showing a decline.
“Combined we are going to be about 8,000 bales short in this two week period than what we have been historically,” he said.
AWI review expected to be released next week
It is expected that the independent review, undertaken by Earnest and Young (EY), into Australian Wool Innovation’s (AWI) governance and performance will be released next week.
EY was selected by the Department of Agriculture and Water Resources to undertake the independent review which was welcomed by Agriculture and Water Resources Minister David Littleproud.
The review is expected to look at AWI’s delivery of core objectives like research and development, extension and marketing services to wool growers as well as “additional matters of public interest”.
An AWI spokesman said AWI had been working with EY as part of the extensive review for over three months.
They have submitted well over 1000 documents and look forward to the results of this independent review of performance of the company.