There is still enough uncertainty for the wool market to appear a little directionless at present – with some exceptions like the traditional superfine sector, the rest of the market doesn’t seem to know if it wants to go up or down.
This week the market fell slightly on the first day of selling, before recovering to close down a cent on Wednesday. On Thursday the market showed a little more promise and despite the largest selection of merino fleece for some time managed to hold on and only closed down by another cent. At the end of the week the market indicator was 2c lower in local currency, but 12c higher in US dollars and around 8c higher in Euro.
The few lots available of the best superfine merino types were again sought after by Italian buyers, while the lesser quality superfine merino fleece fell by 20-30c. Medium merino fleece, despite being in abundant supply, closed the week more or less unchanged in local currency, which with a stronger Australian dollar meant a higher price in $US for customers overseas.
Crossbred wools also fared well despite the stronger currency and closed unchanged across the week. Skirting types followed their corresponding fleece types and carding wool prices were solid.
In typical fashion the wool market over the past six weeks has recorded a jump in price, got ahead of itself, then eased for a couple of weeks before once again finding a base where business can be done. Another rise then follows which maintains the overall uptrend that has now been in place for two years so the picture when viewed in a simplistic long-term chart is quite a measured steady uptrend.
Those involved in the industry know that it has been a much more volatile, erratic ride; nevertheless the prices being achieved today in all categories of wool are considerably higher than two years ago. Predicting where the price will be in two years’ time is a challenge at best, or more likely a folly given past experience, however it is easy to be more optimistic than pessimistic at this point.
In Argentina the season has been kind after the severe drought experienced last year. As a result production will be increased, but also much coarser, with little wool below 19.5-micron expected to be available. That will obviously focus buyers’ attention towards South Africa and Australia to secure their requirements for fine and superfine.
The long-term picture for demand looks good. There is some pain being experienced as processors talk to their customers and plan production schedules for the upcoming season. Historically orders are placed in Sept/October for the next season, so in some cases the “new” prices being quoted are a huge increase from last year’s levels.