Wool market opens 7c higher | Elders

Australian wool market opens 7c higher


Wool
RISING PRICES: The Australian wool market has opened the selling season up 7c.

RISING PRICES: The Australian wool market has opened the selling season up 7c.

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The Australian wool market has opened the new selling season up 7c.

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THE Australian wool market opened the new selling season on a much more positive note compared to the final few weeks of the previous season.

Following a 'hand-shake' agreement on the sidelines of the G20 in Osaka between the leaders of US and China to reopen negotiations around the trade war issue and halt further implementations of tariffs a more enthusiastic tone was evident.

Despite some commentators viewing the outcome as not a lot of change, for many in China in particular it was enough to signal a return to more normal operations. This, plus the need to cover the upcoming recess, and next week having almost 30 per cent less wool on offer compared to the corresponding sale last year, made sure that the market was positive.

The colour change on the AWEX report from red to green was welcomed by all and sundry as the trade in greasy, scoured, tops and yarn had hit the proverbial wall in June.

After a bit of a spluttering start on Wednesday where buyers remained cautious and most types were sold at similar levels to the previous week, Thursday saw the recovery gain pace and most Merino fleece types added 20-30c. At the close of play AWEX's Eastern Market Indicator finised on 1723c, only gaining 8c for the week, or US13c and Euro18c. But the overall tone was much better and continued right through to the final catalogue of the week.

Superfine Merino fleece of the correct specifications saw solid European interest, and a better quality Sydney catalogue in particular was well supported by all of the trade.

Medium Merino fleece was stronger again, although the fact that AWEX could only make a nominal 21 micron quote in Melbourne and Fremantle, with no quote in Sydney at all summarises the season that was.

The skirting segment of the market was initially cheaper, but then rebounded strongly to close 50-60c higher in some spots, which would have sent a shudder down the spine of those who sold this type of wool down earlier in the week.

Crossbred wool was generally unchanged across the small volumes which were available. The carding market showed some signs of recovery, although the movement was patchy across the spectrum of different types and different selling centres.

AWEX's Northern Market Indicator closed up 7c on 1738c. The 17 micron indicator closed on 2133c, 18 micron 2107c, 19 micron 2024c, 20 micron 2009c and 28 micron 1030c.

The trade breathed a collective sigh of relief after seeing the market recover some ground last week, and although there was not a huge volume of follow-on business being done, there was enough for most to agree that the market had bottomed out.

Volatility in the wool market is a constant, and we are certain to see plenty of ups and downs in coming months, but it is always nice to enter a recess period on a strong note. Gone are the days when certain nations, or large corporates would 'push' the market just prior to a break in sales, purely so they could continue to trade over the break.

Gone are the days when certain nations, or large corporates would 'push' the market just prior to a break in sales, purely so they could continue to trade over the break. - Bruce McLeish, Elders

Nowadays with mostly smaller companies in the game, tight financial constraints and genuine competition being the norm, the market manipulation antics are long past.

A free market like we enjoy is apparently not happening in Lesotho this year in regards to wool and mohair. A petition of sorts has been instigated, directed to the IWTO highlighting the plight of sheep and goat farmers in Lesotho who have this year been forced to sell their product to a single trader rather than through the auction in South Africa as usual.

Rather than being paid on normal auction terms and with full international competition on their fibre, the only licensed trader has been allegedly rather slow making payment, sending many of these small farmers to the wall. There would no doubt be a very large outcry in any other developed market if a similar situation arose.

Trade issues apart from the US-China one obviously do exist. The wool industry has its fair share of difficulties with different facets, and traders and exporters holding wool in South Africa are still doing exactly that - holding wool.

None of the wool destined for China has actually been shipped at this point, despite China agreeing to its import several weeks ago.

The South African veterinary authorities, it seems, cannot agree on the correct form of paperwork to allow the export of this wool.

These issues are slightly ironic given the push from many European firms for more traceability of fibres. At the recent Pitti Filati yarn fair in Italy the key theme was 'Sustainability'with natural fibres being promoted as adding value to the yarn, but also enhancing the eco-friendly credentials of the new yarn collections.

A key selling theme of many European firms is that they can provide traceability from farm to shelf to the modern consumer. Whilst some Asian processors are following this trend also, the bulk are not doing so at present. If it does prove a success in Europe and is adopted by others the industry will need to move quickly in Australia to satisfy the requirements, in a measured sensible way - hopefully with a collaborative approach and not giving too much credence to some of the more expensive, restrictive schemes which are popping up.

Despite the gloomy economic conditions pervading much of Europe at present the near record crowd numbers at Pitti Filati showed a lot of confidence in the season ahead. These new yarn collections will find their way into garments and be on the shelf for the autumn/winter season of 2020-21, such is the long lead time in the sustainable textile industry. No doubt the 'fast fashion' gurus will have added copious quantities of pollution to our oceans while those using natural fibres do it properly and slowly.

- Bruce McLeish is Elders northern zone wool manager.

RELATED STORY: 'Australian wool market ends season down 51c'.

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