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Insights January 2020

6 January 2020 |Wool
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Insights January 2020

6 January 2020 |Wool

Overview

  • The magnitude of the impact of bushfires on record low flock numbers may not be known for months, keeping pressure on supply in 2020.
  • The outcome of the UK elections combined with the potential signing of a US-China trade agreement has increased buyer confidence.

Australian wool supply is expected to decline 10 per cent in 2020. Shearing progress in the current season is well ahead of the typical yearly schedule, suggesting a lower volume of wool has been produced. The magnitude of the
impact recent bushfires has had on record low flock numbers will not be known for weeks, or possibly months.

This, however, will increase the restocking task, which is only likely to begin in earnest once significant rainfall is received. In positive signs for demand, the AWEX Eastern Market Indicator (EMI) lifted by 55 cents/kg before the three-week.

Christmas and New Year recess. This was a result of the UK election providing certainty around Brexit, as well as the United States and China announcing an agreed “Phase 1” trade deal which provided a greater level of confidence
in the global trade environment.

While the details of the US-China trade agreement are not yet certain, should US import tariffs on Chinese woollen clothing be reduced, there is potential the EMI could see an increase of up to 10-15 per cent.

        

Source: Australian Wool Exchange, Australian Wool Testing Authority

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