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Aussie wool markets continue weakening trend
20
Sep '13
Australian wool markets continued this week on the weakening trend initiated at the last series of auctions.

In a seemingly very controlled fashion, the market drifted lower from the onset of selling and by the close, all sections of the offering had had 20 to 30acents wiped from their values. Whilst the larger offerings over this week and the forecast volumes in the upcoming month has taken the pre-existent pressure off exporters, there remains a surprisingly upbeat positive view of the longer term market prospects.

In fact, the last of the sales to conclude this week were in Fremantle where prices matched or bettered the eastern Australian closing quotes, with most of the offering there mainly coarser than 18.5 micron.

Unfortunately the hardest hit wool types were in the superfine category this week of wools finer than 17.5 micron, with the lower quality types being savaged and recording 50 to 75acents loss.

At the other end of the scale, the good selection of spinners and best top making types exhibiting good test readings between 15.0 and 18.5 micron, were very firm and being under some of the best competition for the past few years.

Four buyers were competing strongly for these better types and premiums of 125a cents were being paid, but most of the premium extracted came mostly from the weakness in price of the lesser types, rather than the better types racing away.

Fine, medium Merino fleece and skirtings were the least affected wools on offer this week, and most of the 20 odd cents that was lost was due to the first days selling only, with the last day of auctions producing a much better tone, with a few cents even being recovered late in the day at Melbourne thence Fremantle.

Crossbreds and cardings of all types and descriptions were less in demand this week and as such, prices commenced a steady retreat away from their record high levels. Up to 30acents were lost off their previously established price basis.

The annual Nanjing Wool Market International Wool Trade conference was held last weekend at Su Zhou in China. Unlike previous conferences, this year’s featured a largely optimistic tone from all sectors of the supply chain. Most were expecting Sept/Oct to be flat as the large weights of global wool supply is generally sold during this period, and manufacturers have to absorb quantities not only for current demand but future expected demand.

The only negative was the current lack of orders from China for types finer than 18.0micron, which appears stalled in that nation. High stock levels are apparently being held in that micron area in both greasy and top form.

The coming week will offer around the 50,000 bales mark and the closing sentiment around the auctions would be that types coarser than 18.0 micron should be OK and the price slide may be coming to a halt. In the finer types it is expected only the better types will hold up, and inferior and average types may struggle under the weight of the offering next week at the designated Superfine sale in Sydney.

Australia Wool Innovation Limited

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