After a three-week hiatus, wool prices dropped by the biggest amount in nearly 30 years when markets returned on August 7.
The Eastern Market Indicator dropped 11.29 per cent from the last sale held in July, the biggest percentage drop from one sale to another since 1991.
The Australian Wool Innovation weekly commentary said the reason for the drop in prices was a downward trend in export confidence.
“Prices were severely dented with Merino types and descriptions depreciating well over 100 cents and crossbreds dropped 50 cents,” the commentary said.
According to the AWI, the greater number of bales available due to the three-week break exacerbated the price fall.
For prices to recover, the Rural Bank Insights Update for August said consumer confidence would need to see a sustained increase from current levels in the major markets.
Despite the downward prices, the auction did have some bright spots.
“Whilst the pre-recess auctions were largely the sole domain of Chinese interests, some competition this week appeared from other destinations, such as European, Indian and Japanese interests,” the AWI commentary said.
“Importantly, major European top maker Modiano participated strongly by buying 30 per cent of the crossbreds.”
The Eastern Market Indicator dropped by a further 0.2 per cent in the week finishing August 14.