Wool prices up across all microns

Wool prices up across all microns after steady start

MARKET REPORT: Wool prices increased across all micron categories at Australian wool sales last week.

MARKET REPORT: Wool prices increased across all micron categories at Australian wool sales last week.


Wool prices increased across all micron categories at Australian wool sales last week.


INITIALLY wool types rose in price, while other types fell away last week but on the last day (Thursday) everything got going and there were plus signs against every micron category.

The overall washout at the end of the week was a modest 3c rise in the EMI (+US8c). Melbourne sold earlier in the week to accommodate the Friday public holiday and the large volume of medium micron Merino wool in that centre was a little more than the market could absorb so prices were generally lower for these wools.

The North Regional Market Indicator closed up 17c on 1333c. The 17 micron indicator closed on 1613c, 18 micron 1596c, 19 micron 1527c, 20 micron 1405c, 21 micron 1393c, 22 micron 1364c, 28 micron 770c and 30 micron 603c.

Sydney held a designated superfine sale and these better wools found very good support, particularly on the second selling day. 

Fremantle sellers benefitted from a last minute buying squeeze as exporters scrambled to fill orders that had been placed during the conference in China the week before. Many of these orders obviously had tight specifications around length and strength and the discounts for ‘out of spec’ wools increased significantly.

The market is showing positive signs, but demand is not yet stable, nor coming from all parts of the globe for the wool market to tread a smooth path, so we will probably continue to see two steps forward, one step back for a while yet. Superfine wools destined for Europe are doing well and the premium for both micron and style are increasing nicely. But a lot of the buying taking place in Australia is against ‘hopeful’ orders rather than firm orders at this stage. Those companies processing the better, finer edge of the Australian clip have been doing so for a 100 years or more, and they well know the seasonality of supply.

Even though things in Italy are quoted as being quiet during September, these firms are willing to commit their purchasing dollars early if needed to secure raw material. The orders for fabric will come later, but at present in Italy processors are still exhibiting their wares as shows in Paris and Milan. Feedback from new worsted fabric is moderate, but knitwear is again continuing to dominate the discussion, and this is borne out by the relatively high price for pieces and shorter wools here in Australia.

Other Western European processors appear to have hit the ‘go’ button in recent days with much more activity from spinners and weavers, some placing orders with suppliers directly from the fair as they talk to customers and realise that they do not have anywhere nearly enough raw material in their warehouses. The relatively empty pipeline will present some challenges in the coming months for those who have waited, particularly in Europe where they remain a long transit time away from the raw material in Australia.

Some of this activity will no doubt reverberate across Europe to processors in the Baltics and Russia, and there is some enquiry beginning to emerge from there across a whole range of wool types. However the uncertain nature of exchange rates, government policies and regional tension still make life uncertain for the trade.

China, the initial destination for at least 70pc of Australia’s woolclip is slowly, tentatively entering the new processing season. After a flurry of activity surrounding the new plush fabric and a plethora of uniform orders demand has faltered a little. Wool prices are not extreme by any means, but demand is yet to solidify enough for confident buying of raw material. During the recent Nanjing Wool Market conference held in Wuxi the overall tone was positive, and the message is starting to get through that Merino is a premium fibre these days. Old habits die-hard though, and there is a section of the trade still trying to make merino fibre, at today’s price fit into a cheaper commodity garment. In general however those involved in processing of the wool fibre are realising that they are operating

at the luxury end of the market and need to invest in development of new products, processing and marketing. Xinao Group, in Zhejiang Province, China is a good example of this investment as they recently opened the Knitwear Development Centre in conjunction with AWI. This facility, together with the Wool Development Centre at Nanshan in Shandong Province will provide not only product development, but also training opportunities for designers and retailers to learn about this ‘new’ luxury fibre. To growers, wool is certainly not new, but to a whole generation of designers, retailers and customers it needs to be treated as a new fibre in order to move away from the demons of the past.

Superfine: Continued activity form the European fraternity bodes well for the upcoming season and there is an evident trend to wards larger premiums for micron and style.

Medium Merino: Increased supply of medium merino is challenging the market at present, however it is only a matter of time before demand increases again, or solidifies enough for the market to move forward. Supply in the longer term will increase marginally, but it will still be a constraint in coming months which should see prices for 21 micron back above 1400c before too long.

Crossbreds: Despite current prices being softer than many would like, on the charts 28 micron is still comfortably within the trading range that it began in 2012. With plenty of upside for merino prices it is unlikely that crossbreds will breach this range so further downside is limited.

- Bruce McLeish is Elders northern wool manager.


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