The Australian Wool Exchange (AWEX) Eastern Market Indicator (EMI) is expected to lift with the suspension of wool trade from South Africa to China on the back of a foot and mouth disease (FMD) outbreak.
A statement released by Cape Wools SA, the peak body of the South African wool industry, said the decision had been made to postpone a crucial wool auction due to China's customs department suspending all greasy wool imports from South Africa following a FMD outbreak earlier in the year.
The closing price for wool at the end of last week’s auctions was 1968 cents per kilogram.
Already 156c higher than the same time last year, Fox and Lillie’s managing director of wool trading and export, James Lillie, said immediate impact on the Australian market would be positive.
“They (China) are going to get worried that they are going to miss that bit of supply,” Mr Lillie said.
“It’s equivalent to about 6000 to 10,000 bales a week, so it’s probably around about 10pc to 15pc, sometimes 20pc, of what we sell here weekly.
“It is not insignificant, it is the second biggest market for wool and it’s all Merino, so it is an important market.
“With supply tight because of the drought here, people are looking for supply, there are not big stocks around of greasy wool as far as we can see. Every little bit impacts.”
The announcement comes just days after two detections of FMD were confirmed by the Australian Health Laboratory in meat products declared and seized at Australian airports since December.
The pork jerky, sausages and other pork products were collected by Department of Agriculture staff between December 3-16 last year and from January 21 to February 3 this year.
Agriculture Minister David Littleproud said FMD was "considered the biggest threat to Australia's agriculture" and travellers that did not declare animal or plant products would face fines and possible court proceedings.
"I won't tolerate travellers risking Australian farming," Mr Littleproud said.
Australian remains free from FMD, but WoolProducers Australia said the suspension sets a timely reminder of the impacts that an FMD incursion would.
“While the Australian wool market may receive short term benefit on the back of this suspension, it should serve as a serious prompt about the ramifications of what an FMD outbreak would have on the $3.9 billion Australian wool sector, and the wider Australia economy if there was an FMD incursion in Australia,” WoolProducers CEO, Ms Jo Hall said.
WoolProducers, as the wool industry signatory for the Emergency Animal Disease Response Agreement (EADRA), invests significant levies into EAD preparedness and response activities on behalf of Australian woolgrowers.
“We take this role extremely seriously to try and ensure that if an Emergency Animal Disease (EAD) incursion, such as FMD, did occur in Australia that the industry is as prepared as possible,” Ms Hall said.
“It must be understood that in the event of an FMD incursion in Australia, regardless of where the outbreak was detected that the entire trade would be shut down until our trading partners were confident of our disease status, which could take many months.”
“This would obviously have catastrophic impacts on all Australian woolgrowers.”
Ms Hall said WoolProducers wrote to Mr Littleproud late last year calling for tougher penalties for people caught trying to bring prohibited products into Australia.
The release from Cape Wools SA said it was awaiting official notification from China regarding the exact position of the China Inspection and Quarantine Bureau with regards to its imports.