Industry News

Industry News

The wool market experiences regular price cycles from trough to peak and then back to a trough. These cycles are driven by stocking and destocking decisions within the wool textile industry and it tales about 7-9 months from trough to peak. Every so often we see a Supercycle, one which goes for much longer and involves a much greater increase in prices. In the past 30 years there have been four such Supercycles and I think the current market is the fifth such Supercycle.

The duration of the current Supercycle is in line with the two Supercycles in 1986-1988 and 1993-1995. It is longer than the two others in 2001-2003 and 2010-2011. As well, the % increase in the Eastern Market Indicator (EMI) for the current Supercycle is smaller than for previous Supercycles, mainly because the starting price was much higher. Finally, it is impossible to discern at the time of the initial upswing of a cycle whether it is a normal cycle or the start of a Supercycle. It is also hard to know why a cyclical upturn develops into a Supercycle.

Full details can be found in the full edition of the NCWSBA's Weekly Newsletter. This includes a table showing the peak of the EMI in both US$ and A$, the extent of the increase in the EMI for each Supercycle in c/kg and in % terms, the number of weeks from the start of the upturn to the peak, and the underlying economic and industry conditions. The full version of the NCWSBA's Weekly Newsletter is available to NCWSBA members.

National Council of Wool Selling Brokers of Australia

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