Wool market rebounds | Elders

Australian wool market rebounds


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STRONG CLOSE: The wool market managed to struggle through the sudden surge in supply volume after the Easter recess.

STRONG CLOSE: The wool market managed to struggle through the sudden surge in supply volume after the Easter recess.

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The wool market managed to struggle through the sudden surge in supply volume after the Easter recess.

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AUSTRALIA’s wool market managed to struggle through the sudden surge in supply volume after the Easter recess, which initially saw nearly 60,000 bales on offer.

In the end there were only 54,400 bales offered for sale and 94 per cent of these found new owners during the week. Initially, on Tuesday the market looked like it could get a bit ugly with prices easing by 20-30c in most categories. However, by the end of the week, despite a stronger local currency most types had positive numbers against them.

Superfine types are still adjusting after their meteoric rise and some lower quality offerings coming through the system, so they were generally a few cents easier. The medium Merino types recovered from the scare on Tuesday to bottom out on Wednesday and then provide a spirited fight-back on Thursday especially in the WA market, where they closed above the eastern quotes.

The knitting industry continued to scrounge for low VM skirting wools, lambs and prems, and anything that fit the specifications was dearer, while the high VM, poorer style lots received their now customary heavy discounts. Crossbred wools, at least the more apparel friendly 28-30 micron bracket found renewed favour from Chinese buyers all of a sudden and rose by up to 40c.

Carding wools did the same and strong competition from the top 4 processors/exporters saw their prices rise by 30c.

Overall the market gained 4c to close on 1776c, as measured by the EMI, and shrugged off the stronger currency effect to rise by US12c. While many in the trade both within Australia and overseas were bracing themselves for a significantly weaker market, a collective sigh of relief was heard at the final bell.

AWEX’s northern market indicator closed up 9c on 1846c. The 17 micron indicator closed on 2763c, 18 micron 2293c, 19 micron 2037c, 20 micron 1929c, 21 micron 1893c, 28 micron 899c, and 30 micron 638c..

Nobody in the pipeline wants to see prices go down, but the sudden increase in volume by 20pc to provide the largest sale of the season in what is generally a quiet time of year spooked the horses a little. But the early stage processors in China are looking forward and seeing hungry machines needing to be fed, with very few sources of greasy wool around apart from a dwindling supply in Australia and South Africa.

The general consensus in the trade is that the price increase can be passed on mostly, and people are excited by the prospects of a new season not that far away. - Bruce McLeish

It will still be another couple of months before the Russian and Chinese clips reach point of sale, and the average combing mill in China needs around 200 bales of wool per day to keep running. Stock build up is not yet becoming an problem with existing orders still needing to be filled and shipment times the most talked about issue. However new sales for scoured, carbonised and wooltop have been hard to come by in the last couple of weeks reinforcing the inevitable slowdown in demand that is on the horizon.

Most people in the trade, from topmakers and carbonisers to spinners, knitters and weavers, and garment makers have had a really good season to date. The general consensus is that the price increase can be passed on mostly, and people are excited by the prospects of a new season not that far away. There are of course some exceptions and you can always find someone who has the gripes about life or prices of wool. Often it is currency related, or those that are new to wool, or using it to enhance their cheap synthetic products and suddenly finding that the cost of this fibre has risen considerably.

Those heavily invested in pure Merino, and those who are able to enunciate the story and the benefits of it, are finding more and more consumers accepting of the price this season. The usual trend will probably re-establish itself in coming weeks with a gradual (hopefully) easing of price through until the recess. The pipeline is the same length today, but the individual players these days are smaller than 10 or 20 years ago, as is the ability to buy or sell large quantities. This has provided a degree of stability to the wool market as it is no longer possible for anyone to purchase, or sell a couple of thousand tonnes quickly and obtain a market moving position.

Years ago this was possible, and some companies were able to disrupt the market often in the April/May period, but with strained finances and a lack of buying options it is now virtually impossible – which is welcomed by nearly everyone. So we have managed to get through this current speed hump, but the reprieve is most likely temporary, but there is no sign of an impending crash coming either.

Superfine: The few good style wools currently available are receiving adequate attention, but the trade is reminding growers via prices paid, that poorly grown or prepared superfine Merino does not bring anywhere the same money as the best.

Medium Merino: The futures market is gradually coming back into line with expectations for te spring, seeing 21 micron around 1700, which will perhaps be the floor.

Crossbreds: Some suggest fake fur is driving the crossbred price, while other maintain it is just combing mills looking for lower risk, lower cost inputs – either way it is good news for crossbred growers.

- Bruce McLeish is Elders’ northern zone wool manager. 

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