AFTER an extraordinary eight week record price rally, the country’s key wool price barometer has tapered 44 cent a kilogram from the 191c/kg gain made since the Christmas recess.
The Eastern Market Indicator (EMI) fell sharply last week to close at 1502c/kg, back 33c in US terms to US1151c/kg.
Nationally more than 45,000 bales were offered across the three selling centres, which sold for an average $1645/bale.
While the 17 Micron Price Guide (MPG) has rallied by almost 800c/kg since November, to peak at 2411c/kg last month, Australian Wool Exchange senior market analyst Lionel Plunkett said weaknesses had begun to appear in trading with the market retreating.
Mr Plunkett said last week, the fine wool market of 19m and finer fell sharply from 60-120c/kg last week.
“There were large falls in the market overall with the most effected being ultrafine microns,” he said.
“In Sydney, the 17m price guide had its largest one week fall since October 2011.
“That was on the back of a five month rally where the 17m has increased 49pc – a correction at some stage was expected.”
Despite these falls, the 18-19.5 MPG remains at the 99th percentile level.
The Northern Market Indicator recorded the most dramatic fall, down by 54c to 1587 c/kg, while the Southern Market Indicator and the Western Market Indicator softened by 38c and 46c to 1447c/kg and 1488c/kg respectively.
Crossbred prices also eased, with losses of 5-20c experienced across the entire range.
New England Wool managing director Andrew Blanch expected the market volatility to continue until the mid-year recess, saying “unfortunately, this is the correction we had to have”.
“The price has got to a point where people can’t pass it on,” Mr Blanch said.
“Most commitments seem to have been covered and now the real market is baulking at these high prices.”
He said while demand had not disappeared for superfine types displaying better style and soundness, the market had hit a price ceiling for the time being, and particularly for types bound for the Chinese market.
“The types that were discounted the most were the poorer, tender and high Vegetable Matter wools,” he said.
Mr Blanch said the sharp fall in the price indicators “looked worse than it was as there are markets within markets”.
“There have also been exaggerated price reactions due to small quantities of superfine, and particularly sound types on the market,” he said.
“The test of the strength of the market will be when the real quantities come in September and October.
“In the last six weeks, there has been some old wools flushed out but that is starting to clear so we’re back to basic quantities of fresh wool now.”