Coronavirus attack gives wool market a painful week

The Eastern Market Indicator shed 83 cents a kilogram clean this week to dive to 1438c, the biggest weekly fall since last October.

Mecardo analysts Robert Herrmann and Matthew McAdam said not even a collapse in the Aussie dollar to as low as US55.7 could halt the slide in the EMI. In US dollar terms, the EMI lost 181c to finish on 801c.

They said the sales had at least ended on a positive note with the Fremantle market clawing back some of the big losses earlier in the week.

Despite the price plunge next week's national offering will increase to 49,874 bales with all three centres in operation.

Executive director of the National Council of Wool Selling Brokers, Chris Wilcox, said the wool market had finally succumbed to the coronavirus pandemic.

Prices for Merino wool had fallen by up to 147c kg in the eastern selling centres, he said.

"The closing level for the EMI is the lowest in US dollars terms in almost a decade (since September 2010).

"I've been talking to my contacts in China over the past week and they say that life is starting to return to 'normal' after the Covid-19 epidemic there.

"This 'normal' life includes mandated requirements to wear masks in public and in offices, no air conditioners and regular and constant temperature checking of everybody as they move around the cities.

"They also tell me that mills are coming back into production (including in Wuhan, the epicentre of the pandemic). This is good news and hopefully will bring increased orders from mills keen for raw wool.

"However, elsewhere around the world we are seeing the opposite as cities, states and countries close down. It is the longer-term economic impact that is of particular concern.

"Everything would need to go right with both fiscal and monetary policy for countries and the world to avoid a significant recession," Mr Wilcox said in his weekly newsletter.

AWEX said it was clear from the opening bid at Tuesday's sale in Melbourne that buyers had reduced their limits.

By the end of the sale the individual micron price guides had fallen by 29 to 58c, lopping 19c from the EMI.

The losses continued into the second day with all three selling centres in operation. Micron price guides tumbled another 26 to 99c with the largest falls in Sydney and Fremantle.

On the back of these large losses, the EMI dropped by 52c, the largest daily fall since January.

AWEX said the market continued to track down on the final day but not at the same rate of the previous two days, as buyers became more confident of the new price levels.

The eastern micron price guides lost another 3 to 40c, with the EMI falling by 12c.

A total 30,871 bales were sold from a national offering of 41,986 worth $46.49 million.

The Northern Indicator (Sydney) lost 88c during the week to finish on 1469c. The Southern Indicator (Melbourne) dived 80c to 1418c while the Western Indicator (Fremantle) shed 78c to 1538c.

The Fremantle market was underpinned by a pass-in rate of 26.5pc and pre-sale withdrawal of 15.8pc.