Combined factors hit wool auctions hard -
Wool auction rooms are facing pandemonium on the first day of sales after the two-week Easter recess, after the eastern market indicator went into freefall, dropping 114 cents, to finish at 965 cents a kilo clean.
The western indicator plummeted 125 cents, to 896.
In Fremantle yesterday, just over 9000 bales were put up for sale, and just 450 were sold.
Elders wool marketing manager in Western Australia, Ken Walker, says the slump was due to a couple of factors, most pressing, the outbreak of SARS affecting the woollen mills of Australia's biggest customer, China. "It is having a major impact on all industries.
"Buyers are worrying about having too much stock on hand - the dollar jumping up to 62 again didn't help – but that's only the minor part of it,
"Short term, SARS and stock on hand, have caused uncertainty."
Sales around the country ended up in a Mexican stand-off. Wool growers who'd flooded the market with 90,000 bales for the week passed in up to 80 per cent of the offering, shutting buyers out of the market.
Australia's biggest buyer of wool, Itochu, says buyers were forced to sit on their hands as lot after lot failed to meet its reserve.
The company's southern regional manager, Chris Kelly, says he'd factored in a price fall, but not to this extent. "I'm probably surprised by the extent of it. We certainly thought it was going to come off but not to the amount it did. At $1 - $1.40 across the board for all types except for the cross-breds about 70 cents, I don't think anyone's really talking bargains at the moment.
"A fall like that means that we can't trade wool and it's just a combination of what's been going on in the last few months."
Mr Kelly says he expects the market to regain ground over the next few weeks.
In Melbourne's auction rooms, it was the biggest one-day fall since the demolition of the reserve price scheme, according to Graham Turner from Arcadian Wool Brokers at Geelong.
His company had 2500 bales in the sale, and 80 per cent of that didn't meet its reserve price.
But Mr Turner says not all growers have the luxury of passing in their wool. He says autumn is a peak shearing time, and growers want their money. "That's their annual income coming in and they'll be wanting to sell their wool and get the money.
"We had one farmer's clip yesterday and almost all of it was passed in... then after the sale he informed us that they were still better prices than he got last year 'and please sell it'. So it's not the end of the world yet."
To listen to Kate Raston's extended audio report, click here.
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