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Insights April 2021

13 April 2021 |Wool
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Insights April 2021

13 April 2021 |Wool
The April update provides an analysis of production and pricing trends for Australian wool producers.

Commodity Overview

  • The Australian wool market remained volatile over the past month as logistical and shipping issues continue to impact the global trade of wool.
  • Australian wool prices are expected to firm over the current month as global producers have either sold most of their wool or are still a couple of months away from shearing.
  • Demand from Chinese buyers remains tempered as mills struggle to return to full production following the Lunar New Year break.


The Australian wool market remained volatile throughout March as logistical issues continue to impact the trade of wool. Producers are hopeful the Easter recess period will allow shipping lines to clear some of the backlog heading into April, easing logistical issues seen over the past number of months. Australian wool prices fell throughout the middle of March with prices rebounding late in the month as export demand improved. The AWEX EMI currently sits at 1,300 c/kg, this is one per cent higher than the corresponding period last year when the impact of the COVID-19 shutdown was being felt across most major wool export destinations which in turn saw Australian wools prices decline substantially.
Heading into April, wool offerings are expected to increase as the recent lift in wool prices and ongoing cash flow constraints encourage producers to sell. The ongoing outbreak of mice across much of the east coast will also add additional pressure on producers to auction their wool due to the increased risk of damage to stored bales. Despite the anticipated increase in wool supply, Australian prices are expected to firm over the next month as global producers such as those in South America have now sold most of their wool supply, with producers in the Northern Hemisphere still a couple of months away from shearing as the weather slowly warms following a cool winter period.
Thanks to this gap in global production, Australia stands as the only major supplier of fresh Merino wool with fine and stylish merino wools expected to continue receiving the highest levels of demand amongst buyers. This demand should see prices within the 18 micron and below range continue to climb. Broader lots will also likely see an upwards tick in prices though this is expected to lag finer wools as has been the case over the past six months.
In terms of export markets, demand from Chinese buyers remains tempered as mills struggle to return to full production following the Lunar New Year break, with local workers seeming to have found new employment opportunities over this period. The ongoing COVID-19 crisis throughout the EU is also continuing to restrict retail demand, which in turn is reducing the demand for Australian wool products from Chinese factories. As the EU begins to re-open their economies following increasing levels of vaccinations, it is anticipated that retail demand for various woollen garments will return.

 

 Sources: Australian Wool Exchange, Australian Wool Testing Authority

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