DESPITE some initial gloomy predictions brought about by a 'large' offering, the wool market showed a bit of resilience and performed very well last week.
Most Merino fleece types rose by 20-40c for the week in local currency terms.
AWEX's Eastern Market Indicator, which is being affected probably way too much by the carding and crossbred sectors showed an increase of only 11c to 1503c for the week.
AWEX's Northern Market Indicator closed up 3c on 1527c. The 17 micron indicator closed on 1925c, 18 micron 1815c, 19 micron 1723c, 20 micron 1708c, 21 micron 1705c, and 28 micron 840c.
Many in the trade despair when customers overseas take a simplistic approach and only glance at the movement in the EMI and base their market information on that single sometimes misleading figure.
Perhaps it is time for a reweighting based on current clip components, or perhaps it would be better for someone to create a more relevant market indicator for the downstream industry to use.
Until then we are obliged to go with what we have, and know that the market rose in general terms by A11c, US14c and Euro7c. Some of the superfine fleece in the Sydney catalogue failed to excite the trade, but overall Merino fleece registered positive movements each day.
Skirting wools followed in lockstep with the fleece types although wobbled a bit on Thursday as a large section of the offering was either too fine, or too coarse for the orders in the market at the moment.
Perhaps it would be better for someone to create a more relevant market indicator for the downstream industry to use.
- Bruce McLeish, Elders
Crossbred wools, at the finer end are continuing to sell, although expectations are that the business is very price sensitive. The carding segment after staging a mini-recovery over the past couple of months just faltered a little, but given we are right in their mid-season in processing terms, they should regain their feet next week.
The buyers in Melbourne had to front up for a three day sale last week in what was the largest offering for the season to date, and many had initially thought that the market would struggle to consume this amount of wool given the calendar constraints this season.
All of the wools being purchased last week and also next week will be delivered to early stage processing mills in China only after the Chinese New Year holidays in 2020.
Some mills will close early, but virtually all mills will be closing by January 18 to allow their staff a week to travel and ensure they are in their home town and ready to celebrate on January 25.
Mills with a good order book will reopen again on February 3 and so this wool will hit the machines only then or in following weeks. The issues of prompt dates and shipping closures always create a bit of angst at this time of the year, and this year is no different, although there have not been any quota complications from China to add to the mix this year given the very low volumes shipped this season.
So, the final selling week will be a mixture of people trying not to buy too much and have funding issues over the break, versus those trying to buy what could be cheap wool if there is a jump in January.
Quite a few operators are thinking that this could be the first season for a while that we do not see a bullish start-up in January. However, we have the imminent phase-one agreement between the US and China.
If this agreement is signed, and if it is a meaningful deal, that could be a shot in the arm for the wool market which could just ignite things for next week as well as January.
Many of the trade in China have had their heads together or tossing comments around on WeChat trying to work out whether to buy or not. Orders are still sluggish and the fake-fur fashion bubble appears to be deflating despite a lot of puffing and excitement that it could provide a boost to flagging sales.
In the meantime, customers from Italy and India as well as a couple of other places have bobbed up to place orders for greasy wool, providing a stark reminder to the Chinese fraternity that while they are important, they are not the only players in the game.
Nobody wants to see the market volatility increase to the extreme levels of three or four months ago, but next week could provide a fair bit of activity in the different segments of the market.
A three-week recess, a Chinese New Year factory shut-down, a bit of uncertainty around how much wool is being held, and how much or how little wool will be coming onto the market in January onwards, all add up to a lot of unknowns.
Those with orders in hand, or a fair degree certainty of getting their usual volume of orders are starting to make noises about buying sooner rather than later, as they don't want to increase their risk profile. Futures, which have been a bit quiet in recent weeks are beginning to gather more interest from both sides of the fence.
The two big factors outside of the wool industry, that everyone is watching closely and dearly hoping will be resolved shortly seem to be coming to a conclusion at present. While those in agriculture know that it is not over until the grain is in the silo, or she of a large girth has vocalised her feelings, the market may be set for a boost of confidence in coming days.
Mr Trump has been telling the world, or at least those who follow his twitter account that the deal with China is 'nearly' done, and should be signed soon. And his folically challenged mate across the Atlantic appears to have romped home in the UK elections, so Brexit should be done and dusted early in the New Year.
While it will obviously throw up some tumultuous problems at least Britain and the Continent can actually move forward with their lives. This should add a degree of confidence to many markets, and although we will most likely get a lull over the Christmas break both positive scenarios - providing they come to fruition - will be beneficial for wool prices in the New Year.
