|Wool Market Slips Amid Currency Volatility
(December 1, 2008) U.S. wool trading in October was light with little quantity available for transaction and light demand. Mike Corn, Roswell Wool manager, commented that he felt wool demand is holding steady, but currency fluctuations have played havoc on the international market. He was confident that the recent increase in wool demand from the U.S. military could compensate for possible reduced international presence in the U.S. market next spring (11/6/08).
Corn commented that the U.S. Certified Wool Program would likely benefit the wool industry. Producers that do not participate might have their wool discounted. He has found that wool buyers are very particular and standards are high.
Australian wool prices have trended downward in 2008 through October. Between September and October, the Australian Eastern Market Indicator (EMI) slipped 7 percent – down 16 percent from last October. In general, worldwide sluggish demand is trumping the price-lifting effect of tighter supplies.
However, there are signs that the underlying climate of the wool market is strong. Despite another fall in the Australian market, analysts believe interest rate cuts in China and the United States in October helped restore some confidence across global markets and should ease credit restrictions (The Wool Record Weekly, 10/31/08).
Currency fluctuations in October likely hindered sales. However, in early November, Chinese direct-buying companies re-entered the market after a three-week hiatus. Lempriere, Fox and Lillie's Bruce Toms reported, “The weakening Australian dollar (and the stronger U.S. dollar) helped Chinese independent operators who were much more active compared to previous weeks," (ABC Rural Australia, 11/3/08).
Between January and August, U.S. raw-wool and top exports fell 70 percent year-to-year to 7.5 million lbs. Raw-wool exports fell 47 percent to 7.4 million lbs. Total wool-textile exports out of the mill fell 19 percent to 59.5 million lbs. Within all-wool textiles, the category with the most volume is typically wool yarn, thread and fabric. Exports in this category were down 27 percent year-to-year to 26 million lbs.