Australia : MARKET TREND : Wool Prices To An Eight Month Low

According to traders and analysts SARS epidemic lead wool prices in Australia fell to an eight-month low after China.

Retail sales of knitwear and suits in China, which buys about 40% of Australia's wool exports, or A$840 million of the fibre, have dropped since April as concern about the outbreak of severe acute respiratory syndrome deters people from visiting department stores and other crowded areas.

Wool prices have slumped 18% this year as consumer confidence in the US, the biggest market for woollen.

Apparel, slipped to a nine-year low in March, and retail sales slumped in Europe, Australia's second-biggest wool market behind China.

"Even in Shanghai, where there have been fewer SARS cases, people are avoiding going to department stores and shopping malls," said Chris Wilcox, chief economist at Woolmark Ltd, which provides technical services, such as market analysis, to the wool industry.

The Eastern Market Indicator, the benchmark for auction prices for raw wool, this week fell 1.2% to A$9.50 a kilogram the lowest since September 5.

"Sentiment is pretty negative all round", Malcolm Condie, manager of client brooking at Wesfarmers Landmark Ltd in Melbourne. Australia supplies half the world's wool used to make suits.

China bought 239,000 metric tons of Australian wool in the marketing year ended June 2002, said Brian Dalitz, a trader with Louis Dreyfus & Cie in Melbourne.

That will likely fall to 193,000 tonnes in the current year, he said.