Extraordinary week of selling at Australian wool auctions

"The magnitude of, initially the falls and thence the subsequent gains, are not only indicative of the volatility of current demand but also a result of the hand to mouth nature of the operations of the modern day industry. In the limited supply, any slight shift in sentiment to the positive will produce magnified movements and this week's gains were exaggerated by the market price falling way below the balance point of supply versus demand," the Australian Wool Innovation (AWI) said in its latest 'Wool Market' weekly report.

"The three weeks of previous sale results were perhaps not reflective of the actual demand scenario but more slanted to the sentiment of global rhetoric influencing confidence negatively. As the dust settled on the market fall, potential losses were examined and almost all companies involved in the trade had some serious issues to face as far as plummeting value of their stock inventory was concerned. Hopefully the gains of this week can alleviate some of that pain," the AWI report for sale week 11 of the current wool marketing season said.

The merino fleece sector was the major beneficiary of value increases, with the fine / medium (19 to 22 micron) wools most sought. That segment saw gains of 250 to 300ac for the week, whilst the 18.5 micron and finer gained 100ac to 150ac. AWEX reported that the EMI rising by 170ac was the largest ever price gain in a single week and most of that was influenced by the incredible gains of the merino fleece.

The auctions were firmly led by the local Australian exporters. However, prior to sales commencing sellers withdrew a lot of wool that was originally scheduled for sale and subsequently just over 19,000 bales were eventually offered to the trade of Australian wool. "This quantity was also offered over all three selling centres which surely must be some type of record low for volume offered at our traditional “peak of the season” time of year as far as quantity goes," the report said.

"Buyers are fully expecting a mini flood of wool pushed back into the auction scene now and it will be somewhat of a litmus test as to the state of immediate requirements dependent on market direction once the volume hits," it added.

Around 31,000 bales would be up on offer at the next week's auctions. (RKS)

Fibre2Fashion News Desk – India