Wool prices have continued falling in Australia for the third consecutive week over a poor quality of drought-affected fibers in the current period. The Chinese ban on South African wool is also depressing the global market.
Wool prices have this week fallen for the third consecutive week in Australia.
According to the AWEX, the market indicator has dropped 29 Aussie cents per kilo clean or 1.44%, losing 18 US cents or 1.3, 1.22 yuan or 1.29% and 18 euro cents or 1.4%.
This new fall of prices may be due to different factors.
First and most important, the quality of offered lots is very poor in the current period, as a result of the long-term drought affecting the Eastern part of Australia.
If buyers sharply compete for small available quantities of best-quality wool, they are not ready to pay higher prices for most part of the current offer.
Even a lower level of available quantities this week has not been enough for avoiding the fall of prices.
A slightly lower Australian dollar has not helped in supporting demand, in addition.
The Chinese ban over South-African wool is also negatively affecting the market as Chinese importers have been trapped with their shipments being stuck somewhere between the two countries. These traders are therefore confronted with financial difficulties and limit buying of Australian wool.
China has decided to ban South African wool as a consequence of an outbreak of foot-and-mouth disease in different parts of the country where wool is not grown.
Crossbred favored by false fur boom
The market continues also favoring broader types whereas not supporting merino fibers.
This could be partly due to Chines use of crossbred wool in production of false fur currently favored by fashion trends.
Source: Emergingtextiles
