According to Rabobank, agribusiness finance specialist, recovering global demand and garment sales are expected to bring Australia’s wool price benchmark up to 1600c/kg clean in the coming year.
According to Rabobank’s latest projection, the Eastern Market Indicator of the Australian Wool Exchange would trade in the 1450-1600c/kg clean range until June 2022. Rabobank analyst Dennis Voznesenski, speaking on the RaboResearch podcast Booming commodity prices rubbing off on wool, said demand indicators for wool are strong practically everywhere.
The commodity price bubble, which has seen certain agricultural commodities hit seven-year highs in recent months, has “rubbed off” on the wool market, according to the bank, with prices rising from last year’s lows, but not to the same dizzying heights.
While some of the causes driving soft commodity prices higher, such as speculative fund activity and government involvement, may not apply to the wool market, Mr Voznesenski believes that the larger global economic recovery is boosting commodity demand, which is having a knock-on effect on wool.
“These factors are having an impact on the price of other fibres, including cotton, while synthetic fibres, which are derived from oil, and have also been part of the commodity boom,” he said.
While wool prices had not surged to seven-year highs like some other soft commodities, Mr Voznesenski said the Eastern Market Indicator (EMI) was 27 percent higher than it had been at the start of the year and had lately “cracked through the 1400-cent mark for the first time in over a year.”
“Super-fine wool micron prices have left coarser wool behind, recovering the price drops from last year and now exceeding prices from early 2020,” he said, “with 17 micron wools rising by 88 per cent since last year’s September low.
“While medium wools have recovered, they have not seen the same rise in prices, with 20 micron wool increasing by 62 per cent over the same period.”
Mr Voznesenski attributed the uptick to improving apparel sales in major end markets, particularly knitwear and the close-to-skin sectors, as well as an improvement in processor mood.
Mr Voznesenski predicted that the high commodity price environment will continue to have a favourable, albeit conservative, impact on wool prices in the future.
Mr Voznesenski predicted that the high commodity price environment will continue to have a favourable, albeit conservative, impact on wool prices in the future.
