May’s wool market update

Highlights for wool

• The Australian wool market has edged lower over the past four weeks. The AWEX EMI has fallen 71 cents and finished week 45 at 1,191 c/kg, marking its lowest weekly finish since February.
• The strengthening Australian Dollar has applied significant pressure on wool prices. The AUD has climbed 8.7 per cent over the past month and finished week 45 at 64.82 USc. This was the highest level the AUD has finished a series at this year. When looking at the EMI in USc terms, this indicator has held on much better. The EMI in USc is now sitting at 772 USc/kg, only down 23 US cents from the recent peak in week 38.
• Buyers continue to be wary of the ongoing trade uncertainty between the US and China. The softer prices have resulted in a sharp increase in pass in rates. After averaging 5.7 per cent between weeks 34 and 41, the national pass in rate has since jumped to average 15.7 per cent over the past three series.
• Wool prices are forecast to edge higher in May, as supply is expected to be lower which will encourage more competition in auction rooms. However, the stronger Australian Dollar, as well as the ongoing trade uncertainty, especially between the US and China, is expected to limit upside. A de-escalation in trade tensions and a more favourable economic outlook for China would go a long way to supporting wool markets.

Joe Boyle

Agricultural Analyst

Joe is our Insights specialist for sheep and wool industries. He hails from a cropping and sheep farm in northwestern Victoria and has studied a Bachelor of Agriculture at the University of Melbourne.