Wool market gains 23c | Elders

Wool market gains 23c to hit 1699c

TOP VALUE: The wool market shrugged off the previous week’s indecision with every micron category gaining in value.

TOP VALUE: The wool market shrugged off the previous week’s indecision with every micron category gaining in value.


The wool market shrugged off the previous week’s indecision with every micron category gaining in value.


THERE was no doubt in anyone’s mind this week about the direction of the wool market. While it is relatively restrained and not performing like the Bitcoin market the wool market shrugged off the previous week’s indecision and every micron category moved up.

Superfine Merino was probably the most subdued sector of the market in only gaining a few cents allowing some of the medium types to catch up a little ground. Medium Merino fleece across the board added 20 to 40c, as did Merino skirtings.

Crossbreds picked them selves up off the floor and rose by 30-50c, while carding wools continued their meteoric rise by casually adding another half a dollar. At the close of selling AWEX’s eastern market indicator had gained 23c to close on 1699c in local terms, a more subdued US11c and around Euro15c making sure that everyone across the globe was on the same page.

AWEX’s northern market indicator closed up 8c on 1782c. The 17 micron indicator closed on 2477c, 18 micron 2273c, 19 micron 2015c, 20 micron 1794c, 21 micron 1669c, 22 micron 1581c, 28 micron 772c, and 30 micron 571c.

Not all buyers around the world are equally bullish at present, with the majority of the current demand still coming from China, but other markets are not in a state of despair by any means. With the majority of the world’s early stage processing going on in China it obviously the topmaking/early stage processing fraternity are driving the market from China, and downstream processors in China are creating a lot of this pull through demand.

Suddenly knitter and weavers are screaming at the spinners for "normal" yarn. - Bruce McLeish, Elders

For the past six months the Chinese trade has been consumed with fake fur, double faced fabric and other coating material and as a result taken their eye off the main game. Suddenly knitter and weavers are screaming at the spinners for “normal” yarn, and the spinners are in turn yelling loudly at the topmakers to deliver anything they can as the busy processing season for these garments is now upon us. The low level of stock throughout the production pipeline is creating a fair bit of urgency, and on-time shipment is virtually taking precedence over price.

Add to the mix the three week auction recess coming up after next week’s sale, then no doubt a bit of disjointed shipping over the Christmas/New Year period, and then a decreasing production window before the Chinese New Year shutdown on around the February 11, and you have plenty of production managers getting nervous.

None of the usual December problems appear to have affected the market this year with tight cash flow being managed okay, no talk of quota shortages in China, and no real problems with letter of credit delays to cause buyers in Australia to hold back. Despite a last minute push from growers to get wool into sale prior to Christmas there appears to be enough demand at present to cope with the volume and even push prices a little higher.

The Riemann futures market is again recording increased weekly turnover and although it still remains a small portion of the total industry does provide a very good barometer of near term trends. Currently prices close to the spot market price are available for much of the first quarter in 2018 illustrating the degree of confidence among the trade.

Commodity prices in general are doing quite well and textile fibres, particularly in the Chinese market are moving up. Merino is still leading the pack and getting further away from cotton and polyester, but the other types are not going backwards either which makes the current merino prices a little easier to digest.

In US dollar terms the price rise over the past two years is strong, but more sustainable than if viewed in Aussie dollar terms. As the US dollar has strengthened the Australian woolgrower has been given a bonus on top of the rising wool price. This does, however, raise a cautionary note that if the US dollar were to fall and the Australian dollar to rise, we would more than likely be obliged to return some of this premium.

HSBC published a research note during the week outlining the PMI increases across Asia in which they noted that advanced manufacturers have been riding on a high for a while, whether in east or west. The trouble is that the current industrial uptick is bypassing parts of emerging Asia. Advanced machinery and high-tech gear is currently in great demand, other stuff less so, according to HSBC.

Some similarities can be found in the world’s apparel market at present. Merino and other luxury fibres such as cashmere are doing very well, especially when they are being used in ‘high-tech’ or new garments and luxury items for the advanced consumer economies. Performance is much less exuberant in the generic markets such as wool/acrylic sweaters or traditional uniform business. Still something has to lead the way and there are plenty of indicators of global growth moving forward again after finally shaking off the lingering effects of the GFC.

- Bruce McLeish is Elders’ northern wool manager. 

The story Wool market gains 23c | Elders first appeared on Queensland Country Life.


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