Australian wool auctions show stronger close in Fremantle this week

18 Aug '23

2 min read

Pic: Shutterstock

Insights

This week's Australian wool auctions ended similarly to last week, with Fremantle seeing a stronger close.
This is perhaps due to no WA auction next week and pending August orders. Major Chinese manufacturers were active, and top local traders took a high per cent of categories.
A weaker Australian dollar assisted growers but reduced export value.

The Australian wool market continued to follow the trends of the previous week, with Fremantle's market witnessing a notable stronger close. This trend was potentially driven by the fact that there will be no Western Australia (WA)auction next week, allowing for travel for meetings in Melbourne as part of the annual wool week. Outstanding August orders needing completion also likely played a role.

Most types and descriptions on offer sold 15 to 25ac lower by the week's end, with WA being less affected by this decline.

Traders continue to find success in booking new orders, with China being the primary destination. However, prices must be competitive, and the quantities booked are seemingly restricted to only one or two of the major suppliers who can meet the demanding price levels within the shipment timeframes provided. Logistics have now assumed a greater role in preferred supply arrangements with the major exporters, but price and quality still remain key components in negotiations, the Australian Wool Innovation Limited (AWI) said in its commentary for sale week 7 of the ongoing Australian wool marketing season.

The Australian dollar (AUD), which has been consistently weakening against the US dollar, continues to assist wool growers who are paid in AUD from the auction system. While this has been beneficial to the growers, the export value of wool continues to face a decline, with an average of around 20usc per clean kilogram being eliminated from the gross wool export earnings for the past two weeks. This loss negates the strong July result, where two sales added 43usc in value to wool export.

The strong auction participation from representatives of major Chinese first manufacturers continued this week, but it was the top two local traders who exercised significantly more buying power. These two leading export buyers took fairly high percentages across all wool categories, with 33 per cent of merino fleece, 44 per cent of skirtings, 27 per cent of Xbds, and 23 per cent of cardings being purchased, the AWI commentary added.

Looking forward to next week, a smaller volume of 37,000 bales is rostered to sell in Sydney and Melbourne.

Fibre2Fashion News Desk (KD)

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