COURTESY of a designated superfine sale in Sydney last week, growers saw another strong result in the Australian wool market with up to half a dollar added to some types.
The overall indicator rose by 15c in local terms, and a slightly lower figure of 9c in US dollars. AWEX’s northern market indicator closed up 19c on 1518c. The 17 micron indicator closed on 2080c, 18 micron 2002c, 19 micron 1795c, 20 micron 1562c, 21 micron 1449c, 22 micron 1398c, 28 micron 667c, and 30 micron 531c.
Superfine types continue to find strong buyer support and the best quality lots available sold very well with Melbourne and Fremantle following the lead of the Sydney offering.
Prices for wools finer than 19.5 micron generally rose by 25-50c across the nation, increasing the price basis compared to medium Merino further still. The volume of medium Merino, and the fault in some clips is allowing or encouraging buyers to become selective, but these wools still rose generally by 20c. The knitwear sector remains busy and so the skirting market followed the fleece market almost cent for cent with buyers very keen to secure the finer micron types.
Other carding types were generally firm with gains around 5c for the week. With crossbred volumes beginning to ease, and a more stylish selection on offer prices generally rose at long last, and also showed some positive signals with solid forward prices being achieved on the Riemann board for 28 micron during the week.
With Chinese mills beginning to return to work late this week, demand in China is slowly ramping up. Traders in China have been busy in weeks past to fill this current demand, but it does create a pull through effect into the current spot market. With the South American merino clip almost finished from their very seasonal production and the South African clip also rapidly running out of fleece wools all buyers are necessarily focussed on Australia for their requirements.
In South Africa it is still possible to purchase knitwear types, but around 50 per cent of the offering at present is Lesotho and native wools that are mostly inferior to the normal Merino types and are usually only used in dark shades due to the presence of black fibre. Although the roster for next week in Australia has increased slightly to 47,000 bales it will be unlikely that we will see more than 40,000 bales in any single week going forward until the Easter Recess provides a build up of greasy wool again.
Demand from other corners of the world is steady, but not frenetic – which is the way most people in the trade would prefer to see it. We certainly do not want to see the spikes of more than $1/week as happened in 2011, inevitably followed by an equally savage downturn.
At present with mills returning to work in Asia, at all stages of the pipeline, together with the low stocks of top and yarn in Europe, and relatively low greasy wool availability there is little reason for buyers to look to the downside. It will come either from an external shock, or simply from a seasonal factor when the majority of garments have been produced, but until then things look very good.
There is some renewed focus on the medium Merino types as the micron differentials make the calculations very important. Despite the recent focus on superfine wool, courtesy of ‘fake fur’ and the like, the medium Merino types (19.5 to 22.5) remain the backbone of the industry in China, and the relatively high price of superfine merino will no doubt be renewing interest from some for the ‘cheaper’ types. Whether this flows back down the curve to crossbred wools is still uncertain at this stage, but history shows that the price difference between 21 and 28 rarely stays as wide as it currently is.
The economic backdrop and currency market is remarkably benign at present, and perhaps only the most optimistic punter would predict the calm waters to continue. All across the globe people are talking about various ‘what-if’ scenarios and the growing push towards protectionism and wondering how far we might go in that direction. Hopefully not too far, as the last move in that direction, with the accompanying populist governments of 80 years ago did not work very well. Still the current situation looks good for those selling products into the market now, and there is a healthy forward market operating for those with products still a way from harvest.
Superfine: With the last few clips of best quality superfine wool to be sold at the end of the month buyers are still focused on obtaining what they need to finish current orders, and the more astute buyers are keeping an eye on the weather to see how it will affect next seasons production. The short-term outlook appears positive, but the production calendar is marching on, and within another month the door will start to close.
Medium Merino: While much of the attention of late has been on the superfine end of the clip, a group of Australian growers have been touring Argentina and Chile. Being so far south, on the wind swept steppes of Patagonia, even in summer there is a real chill in the air. The recently launched Woolmark Optim WR Jackets have been a revelation for the group, and admirably showcase what can be produced from 19-micron wool. This product and others in the pipeline provide much optimism for the future of the Merino industry.
Crossbreds: Hopefully the emerging signs of improvement continue and prices improve either with genuine demand or simply on the back of the Merino price wave, but the fact remains that there is still a lot of stock in the pipeline that needs to be cleared, so it will take time.