Wool market rises to 1934c | Elders

Australian wool market rises to 1934c


Wool
RISING PRICES: AWEX’s Eastern Market Indicator finished slightly higher on 1934c, registering a 7c gain.

RISING PRICES: AWEX’s Eastern Market Indicator finished slightly higher on 1934c, registering a 7c gain.

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Overall AWEX’s Eastern Market Indicator finished slightly higher on 1934c, registering a 7c gain.

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THE Australian wool market put in a pretty good performance last week despite slowing interest from the Chinese as they head towards holidays and a weaker US dollar, which caused the Aussie to spike.

Merino fleece was dearer overall, with just a few areas showing a slight decline in local currency terms by the end of the week.

Good style skirtings for the buoyant knitwear sector remained firm or increased in price, but predictably those carrying fault were neglected to a large extent, and a similar story was evident in the carding sector.

Crossbred wools continued to rise strongly on the back of some fake-fur orders from Chinese processors, as well as several processors using these lower risk, lower cost wools to fill uncertain order books. But even with the almost frenetic buying that went on, buyers were once again selective in their purchasing. They were only pushing for the better grown, well prepared lines, in what is becoming a very clear message to the growing fraternity.

Overall AWEX’s Eastern Market Indicator finished slightly higher on 1934c, registering a 7c gain, helped to a large degree by the 50c to a dollar jump in the crossbred indicators. With the weaker US dollar, prices in that currency rose by a hefty 33c. While the Euro was up and down, prices in that currency still rose by around 15c.

AWEX’s Nortern Market Indicator closed up 8c on 1978c. The 17 micron indicator closed on 2538c, 18 micron 2437c, 19 micron 2304c, 20 micron 2273c, 21 micron 2249c, 28 micron 1024c, and 30 micron 839c.

Despite some angst prior to the auction about the effect a quieter Chinese fraternity might have on the prices, market watchers overseas have seen a very positive result overall.

Most early stage processors are obviously now buying greasy wool for late February or early March delivery, when factories are well and truly back in full production and most seem to have full order books until April at least. The need to keep purchasing has not dissipated although ease of which they are able to on-sell their production in China of late has not become any better either.

Besides the obvious appearance of some fake-fur orders using 26 to 28 micron wools over the past couple of weeks the Merino products are moving slowly in China. The business has not stopped, but it is definitely more sluggish than many would like at this time of year.

Interestingly the fake-fur business this season only seems to be operating in the crossbred sector, whereas last year we had the full range from 21 micorn right through to 28 micorn. Obviously, the cost pressures have put paid to using Merino fibre in this particular garment for the time being.

Given the reduction in supply this season for 22/24-micron wool from Australia of between 60 and 80 per cent it is probably just as well, as it would be nigh on impossible to buy a hundred tonnes of medium Merino across Australia at present. Elsewhere around the world the mood is decidedly more optimistic.

There is also a renewed interest from Russian knitters and garment makers with domestic manufacturing being supported to reduce reliance on importing of finished garments. - Bruce McLeish, Elders

Pitti Filati was held recently in Florence and will be followed next week by Idea Biella in Milan. Although both exhibitions are for spring/summer and showcasing yarns and fabrics that will be on the shelves in 18 months’ time in June 2020, there is still a fair amount of wool about.

Some of the larger European spinners are optimistic that the price increases of recent seasons have now been digested by the retail customers, albeit with some modification to blend composition, and the future looks bright over there. So much so that one large Chinese spinner has announced that they will open a production facility in Biella – a serious about-turn for the industry that has seen so much manufacturing leave Italy and surrounding countries to head to China over the past two decades.

Now there is actually a search on throughout Italy for textile technicians as companies ramp up production. Much of what is produced will be exported to China as that remains the growing market for woollen garments despite an obvious slowing economy at present.

There is also a renewed interest from Russian knitters and garment makers with domestic manufacturing being supported to reduce reliance on importing of finished garments. The woollen industry in Russia remains significant although much of it has been mothballed or running on a reduced basis in recent years. A change of focus from the government will be welcomed by those remaining in the industry, even if it comes from a possible short-term trade incentive.

We have seen from the US-China trade spat that nobody wins from a trade war and hopefully these two countries are moving towards some sort of resolution. Whilst nobody expects a brand-new trade agreement to be decided upon in talks in Washington this week, both sides do have an imperative to get something sorted.

The US-China trade war has clearly had the effect of helping to slow China’s economic growth and that makes it imperative that China makes a deal with the US. Conversely the US is starting to see the negative effects of the trade war show up in American company profit announcements.

Caterpillar and Nvidia, a computer chip maker, along with Apple have all said slower sales everywhere, but particularly China have resulted in a decline in profits. The Federal Reserve reacted accordingly and put further rate hikes on hold for now, causing the US dollar to slump during the week.

While there are no doubt a lot of people from each side sitting around the table in Washington this week and bureaucrats never do anything quickly, the resolve of arguably the two most powerful men in the world, Trump and Xi, both of whom appear to have plenty of incentive, and the will, to keep things moving quickly will be paramount to getting a resolution. Although the deadline for an agreement is not until March, meaningful statements of intent in the near term will help to settle many nerves and markets.

- Bruce McLeish is Elders northern wool manager.

RELATED STORY: ‘Positive wool market gains another 5c’.

The story Wool market rises to 1934c | Elders first appeared on Queensland Country Life.

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