A long road to recovery for wool market

Season finishes on a low note as market continues to deteriorate


Australian wool market finishes season on a low note, dropping more than $6 a kilo for the year.


The Australian wool market is facing a long road to recovery after the 2019/2020 selling season finished on a low note with the only positive trend being in the number of bales passed in.

Last week, the AWEX Eastern Market Indicator (EMI) dropped another 29 cents per kilogram to finish at 1110c/kg, clean.

Year-on-year the EMI has fallen 605 cents or 35.3 per cent and in US dollars a 428c fall, or 35.8pc lower.

The total national offering has seen a reduction of 12.4pc with just 1,470,717 bales offered. This was 194,942 bales less than the previous season.

As expected, the total turnover compared to the 2018/2019 season fell dramatically, dropping from $3.192 billion to $1.973 billion which equates to $1616 per bale.

The national passed in rate finished 6.5pc higher than the previous season, all due to falling prices.

According to AWEX data, since the start of the season, the falls were least at the fine end, where the AWEX average 16.5 microns was down by 21pc, but the falls progressively increased to 40.9pc at 21 microns.

According to industry specialists, the wool industry is facing a long road to recovery.

Executive director of The National Council of Wool Selling Brokers of Australia Inc., Chris Wilcox, said the outlook is grim for the trade situation of China's wool textile industry with demand remaining extremely week.

"It has been a very tumultuous season as the global impact of Covid-19 has affected all sectors from grower to processor and retailer," Mr Wilcox said.

"China's exports of wool products - top, yarn, fabric and clothing - accounts for half of the raw wool that China imports each year.

"And those exports have slumped in the first four months of 2020 with the decline most intense in exports of wool clothing and wool fabric."

He quoted China's exports of woven wool clothing were down by 35pc in the January-April period, while exports of wool knitwear dropped by 30pc.

In terms of destinations of China exports of wool clothing, exports to the US fell the most, down by 71pc, while those to Hong Kong were down by 69pc.

For wool fabric, all destinations recorded significant declines, including a 52pc drop in exports to Vietnam.

Mr Wilson said with the decline in exports of wool products, mills in China have cut back their purchases of raw wool.

"China's imports of raw wool slumped by 23pc in the first four months of 2020," Mr Wilson said.

"There has been a large drop in imports from all sources with the exception of South Africa - the lift for South Africa reflects the bounce-back from last year's ban on imports from South Africa due to Foot and Mouth Disease."

The 2020/2021 season commences this week with 31,072 bales on offer at all three selling centres and next week, before the mid-year break, 29,767 bales are lotted.


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