Tightening supplies drive up Australian wool prices
A thirty-year low in supplies, combined with a surge in demand from wool top processors, is being blamed for the largest weekly rise in Australian wool prices for a decade.
In the first week of the New Year, prices jumped 11.8% on average while the AWEX Eastern Market Indicator price - an average of a variety of wool types and microns – climbed by an equally dramatic 80 Australian cents per kilogram to 835 cents.
According to local sources, the price rises are largely the result of the final disappearance last year of Australia’s wool stockpile, which accounted for around 30% of the world supply throughout the 1990s. However, price levels have further been driven up by higher-than-normal demand from topmakers (a top is the continuous strand of untwisted wool needed for spinning yarn), looking for keep their machines in production.
The price rises are all the more surprising given the strength of the Australian dollar and the relative lack of buyer interest from China, which is by far the largest export market for Australian wool. Since the end of the 1980s, Australian wool production has almost halved as poor wool prices and high meat prices have conspired to reduce the Australian flock to its lowest level since 1950. Now, the fear is that supplies will fall to dangerously low levels as and when Chinese buyer interest makes a return.
