Strong wool market gains 10-30c | Elders

Strong Merino wool market gains 10-30c


Sheep
ON THE RISE: The wool market saw rises of between 10c and 30c in most of the major Merino fleece categories.

ON THE RISE: The wool market saw rises of between 10c and 30c in most of the major Merino fleece categories.

Aa

The wool market saw rises of between 10c and 30c in most of the major Merino fleece categories.

Aa

IN a disjointed selling week, the Melbourne sale on Thursday was postponed until Friday morning following a nearby factory fire that closed the selling centre because of toxic smoke fumes. 

In US dollar terms the market was virtually unchanged with a rise of US6c on Wednesday, followed by a fall of 9c on Thursday and culminating in an unchanged level on Friday.

For the entire week AWEX’s Eastern Market Indicator moved down by US3c, in what most would consider a good consolidation effort. In local currency terms the action was a little more expansive, with rises of between 10c and 30c in most of the major Merino fleece categories. 

AWEX’s Northern Market Indicator closed up 28c on 2145c. The 17 micron indicator closed on 2968c, 18 micron 2651c, 19 micron 2418c, 20 micron 2311c, 21 micron 2286c, 28 micron 965c, and 30 micron 731c.

Initially the Australian dollar rose against the US dollar which was lower on the prospect of more positive trade deals between the US, Canada and Mexico. The US currency has fallen for three consecutive weeks, and is down nearly 2 per cent over this period.

The announcement that Westpac was the first of the big four banks in Australia to raise rates ‘out of cycle’ sent the local currency sharply lower and that trend continued through to the end of the week, boosting the fortunes of Friday’s sellers. The southern market indicator rose by 14c on Friday to boost the EMI by 9c and finish the week at plus 22c on 2090c.

As the dry conditions persist, and meat prices remain high the slaughter rates will make it difficult for the industry to rebuild flock numbers when rain does eventually return to this wide brown land. - Bruce McLeish, Elders

Despite the dry and dusty conditions across much of Eastern Australia the quality of the wool offering is holding up reasonably well. There is certainly an abundance of low yielding wools, but those from the worst drought affected areas are still sound and relatively free of fault underneath the dust.

The scouring industry in China remains under some pressure from the enforcement of environmental policies, and some are voicing concerns about the low yielding wools. But the red dust from Australia’s pastoral zone washes out so easily that there will be little problem when these wools arrive at the mills to begin their processing journey.

In the usual seasonal pattern vegetable matter and yield will both improve through until the end of the calendar year and then fall away again in the Australian autumn. At the other end of the spectrum the first designated superfine sale of the season was held in Sydney and buyers were presented with some very stylish clips. Italian and European buyers were able to flex their buying arms and chase some of the best style wools seen this season.

Buyers of greasy wool from around the world are scrounging every corner of the globe for supply at present. While everybody knows that the supply in Australia will be reduced this year courtesy of the drought, other wool producing nations are having trouble making up the difference. Already the northern hemisphere clip is practically exhausted with Spanish, Hungarian, Russian and Chinese greasy wool all having been purchased, and the majority used in processing already.

The South African season has just resumed after their winter recess and whilst growing conditions there are more favourable than the previous dry year, the plethora of growers shearing every six months makes it difficult for top makers to find any full-length fleece to use. South American growers are just beginning to shear as the weather conditions allow, but already a fair degree of this greasy wool has been pre-purchased by exporters, local topmakers and their agents.

So, attention will shortly return to the availability of wool in Australia. While we are only five actual selling weeks into the new season, a comparative 12pc decline in bales offered is starting to ring a few alarm bells. The flush of wool normally associated with the Australian spring may still be coming, but a recent MLA report showing the number of sheep going to slaughter in recent weeks has increased significantly. As the dry conditions persist, and meat prices remain high the slaughter rates will make it difficult for the industry to rebuild flock numbers when rain does eventually return to this wide brown land.

In the meantime, European processors continue to wind up after their summer holidays, and markets such as Russia and the Baltic’s get back into the swing of production. Many there are still having difficulty coming to terms with the price jump since they last purchased back in January/February, so there is still some head scratching going on. But they do need to buy wool for the coming season, and as much as they may ask for cheaper prices, or different blend alternatives there is very little available in the pipeline.

China is still reasonably quiet as far as downstream or retail demand goes, which is very normal for this time of year. Topmakers and spinners are still slowly moving, and trying to predict what types their clients will need. Spinexpo the large Asian yarn exhibition is being held in Shanghai next week, and that will provide a good gauge to how the Chinese spinners, and others in the region, are faring at present and whether they can pass on the current price level or not. Unless there is a major backlash, which seems unlikely given the European experience, we should see Asian demand start to increase again in the next few weeks.

- Bruce McLeish is Elders’ northern zone wool manager. 

RELATED STORY: ‘Smaller offering dramatically lifts wool market’.

The story Strong wool market gains 10-30c | Elders first appeared on Queensland Country Life.

Aa

From the front page

Sponsored by