Prices dip as Australian wool auctions re-commence

A larger volume of offering, combined with the negative buyer sentiment, exacerbated the extent of the falls, the Australian Wool Innovation Ltd (AWI) said in its commentary on wool auction for the week.

With 29,911 bales sold, the total quantity sold this season now stands at 92,255 bales.

Confidence was down amongst exporters, with minimal fresh business being reported. However, there was a positive signal emerging. 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. Importantly, major European top maker Modiano participated strongly by buying 30 per cent of the crossbreds, the AWI commentary said.

"The continued confidence and support of the Australian wool market being shown by first stage machinery owners also provides a fillip to future prospects. Leading activity in sale rooms came from mainly the top makers. Tianyu, one of the pre-eminent Chinese manufacturers was very keen on the Merino sector with able support coming from the global traders Techwool and Endeavour and Chinese indents from Seatech and others.

"The greasy stocks and clog points along the chain may delay any sustained positive effect initially, but given the past few years has seen global supply reach the lowest points for many decades, an improved demand driven by low prices could quickly eliminate that stumbling block of supply. However, the fundamentals remain weak across most commodities and more rigidity across the entire wool chain is needed to sustain any potential drive upward for wool prices," the commentary added.

Meanwhile, the Australian Wool Testing Authority (AWTA) has tested 13.7 mkg (million kilograms) this season compared with 16.0 mkg for the equivalent period last season.

Fibre2Fashion News Desk (RKS)