Bright outlook for WA wool

26 Jun, 2002 10:00 PM
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A HINT of panic, small offerings and the likelihood of drought in the eastern states should conspire to keep WA wool prices buoyant in the weeks leading up to the annual sales break.

These factors forced prices to rocket upwards in the eastern states last week, where the southern 19 micron price guide (MPG) jumped 91c to 1086c/kg clean.

There were big rises across the southern MPG, with 20-micron rising 69c to 997c/kg and 21 micron was up 67c to 996c/kg.

Broader micron wools also spiralled, with 25-micron leaping 85c to 995c/kg and 26-micron hitting 965c/kg after a rise of 91c.

The eastern market indicator ended the week at 929c/kg clean, an increase of 45c.

These prices were the best seen in Australia since late April.

The offering of just under 26,000 bales was the smallest offering of the year. The pass-in rate was just 5.6pc.

Analysts believe the rally began with buyers rushing to fill orders before the annual four-week auction recess, which begins in mid-July.

It was fuelled by the likelihood of drought in north western NSW and western parts of Queensland, which has forced the downward revision of the national clip.

There are also concerns that this will affect the quality of next season's clip.

Wesfarmers Landmark wool manager Ron Myers said the industry would have to get used to the volatile market.

"Without the stockpile, there is no buffer to take the sting out of the market," Mr Myers said.

"Growers and buyers will have read the market signals.

"The market was on the move last week because of panic about supply.

"There was speculation that the push came from Australian processors who needed wool to keep the factories ticking over.

"This is the first time for many years that buyers will not have the stockpile to buy from during the break.

"But sales will continue. There will be opportunities for direct deals and electronic selling during the break."

There will be consecutive sales in WA in the first two weeks of next month, before the month break.

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