Wool closes on a strong note | Elders

Australian wool sales close on a strong note


Wool
The wool market spluttered around, but eventually closed on a strong note.

The wool market spluttered around, but eventually closed on a strong note.

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The wool market spluttered around, but eventually closed on a strong note.

Aa

AFTER a brief flurry of confidence brought about by the G20 agreement to halt the trade war and further tariff increases, doubts began to creep in concerning the actual agreement that had been reached and whether this would bring about lasting compromise.

This meant that Chinese confidence wavered slightly and the wool market subsequently spluttered around, but eventually closed on a strong note.

AWEX’s Eastern Market Indicator closed on 1849c, down 11c in local terms, and lost US25c, and Euro17c.

However, of the 24,000 bales of adult fleece wool offered for the week, 6000 bales or 25 per cent was crossbred wool. As predicted follow-on demand for crossbred wools failed to materialise after the brief flurry of activity in the previous two weeks and so these wools contracted sharply in price dragging the overall market indicator down.

Merino fleece was generally 10-30c dearer, while crossbred wool fell by 100c, despite about 20pc of these wools being passed in. The final sale for the calendar year sees a similar biased offering with a multitude of crossbred wool again being rostered, so more than likely the trend will continue with merino types getting stronger, but crossbred wools probably drifting rather than falling quite so heavily.

AWEX’s Northern Market Indicator closed down 8c on 1897c. The 17 micron indicator closed on 2513c, 18 micron 2379c, 19 micron 2218c, 20 micron 2147c, 21 micron 2129c, 28 micron 855c, and 30 micron 703c.

What the market continues to struggle with, is the continued supply of drought affected, hunger fine tender fleece and the obviously the plethora of crossbred wool which is normal for this time of year. - Bruce McLeish, Elders

From a demand perspective Merino fleece of good quality continues to find support as mills continue to operate and fulfil existing orders and new business that continues to steadily emerge.

What the market continues to struggle with, is the continued supply of drought affected, hunger fine tender fleece and the obviously the plethora of crossbred wool which is normal for this time of year.

Thanks to the current seasonal conditions the average monthly fibre diameter of merino wool sold in Australia is currently running at 18.5-micron. A far cry from the days when Australia sale centres featured row upon row of 24-micron strong Merino.

Despite some current demand for 23.5-micron types, it would certainly be a challenge to find a home for a lot of this ‘old’ type of Merino, with its associated relatively high CVD and prickle factor in this new modern market.

Not many of the current ‘in-demand’ products being worn next to skin would be as nearly as effective or appreciated if we still produced such wool.

The industry has moved on and upwards, and today’s superior fibre lends itself so much better to being worn in a different way, and thus can command the premium status it currently enjoys.

Not all Merino wool today is being used in next to skin garments, although for some of our follicle challenged cricketers that may still be the case.

During the first test match in Adelaide, AWI presented Cricket Australia with a bolt of fabric to make the next baggy green hats for Australia’s cricket team. The Merino wool had been donated by growers throughout Australia last summer and was processed into a length of cloth which will ensure the ties between cricket and the wool industry continues for many years to come.

In addition to many growers being present at the game to witness the fabric being handed over, acclaimed cricket writer Gideon Haigh has also been commissioned to write a book entitled ‘From flock to Baggy Green’ encapsulating the strong linkage between the wool industry and our national sport over the past 150 years.

As we approach the New Year, with just one further sale to be held prior to the three week Christmas recess the industry is trying to remain positive and moving forward.

The seasonal conditions, which have led to such a dramatic decrease in both production and wool quality have provided a challenge, as has the inevitable price resistance brought about by the dramatic increase earlier in the year.

Although the price of Merino has been on a steady upwards trajectory for the past four years, the market has only become unsustainable, and therefore forced into a correction in the past 12 months.

Prior to early 2018 the pace of increase was relatively modest, and importantly relentless, which means that stock moving through the system was rarely if ever, out of market valuation. The immense spike in price which began in January this year created a volatile situation and as a large proportion of the demand was for short term fashion items, such that the market in general had to react. Since June the Merino market has been more or less retracing much of the early 2018 gains and now appears more settled in line with the four year trend.

It is difficult to believe that nearly two years have passed since the world was turned upside down with the surprise of Donald Trump’s election and Brexit, both of which are still creating some angst, but the wheels have not fallen off entirely either, as some analysts predicted would happen.

There have been a few nay-sayers coming out of the woodwork in the past week commenting that the agreement during last week’s G20 summit did not specify what concrete actions would be undertaken within a definitive timeframe by China and America to resolve the trade dispute.

However, the intent was clear and provided that Mr Trump can hold the Democrat’s impeachment proceedings at bay he should be able to make progress in his bumbling, unorthodox way, which will engender more confidence among the skittish Chinese trade.

- Bruce McLeish is Elders’ northern zone wool manager. 

RELATED STORY: ‘Australian wool market continues to rise’.

The story Wool closes on a strong note | Elders first appeared on Queensland Country Life.

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