Back in business ... but all a bit flat

THE Australian wool market kicked back into gear last week with a somewhat disappointing performance that many had predicted.  

Currency changes made it worse, but it was always going to be a bit of a struggle given the lacklustre demand being experienced around the global trade, traders becoming more cautious to build stock without orders behind them, it also being the lull before the retail season kicks off and smack in the middle of Italian summer holidays.  

So, the AWEX EMI closed down 61 Aussie cents, but highlighting the importance of the currency changes over the three-week recess the movement in USD terms was only a decrease of 28 US cents.  

In Euro terms, for those actually working their half-day roster and not on the beach the market decrease was 42 Euro cents.  

Chinese buyers mostly focussed on the USD prices but also ran their calculators over the RMB price and that was down 2.2 yuan per kilo across the week.

Across the ditch in New Zealand the market continued its rather dramatic rebound after the savage fall seen in July. 

The market in New Zealand has shown how volatile a market can become when quantities are severely reduced.  

Production in NZ has declined massively over the past few years as growers seek better returns from alternative enterprises, obviously very similar to what is going on in Australia, but probably even more severe.  

However, when global demand for carpet wools rebounded following the Covid slowdown the indicator for NZ coarse wools shot up from where it had been languishing at 350 NZ cents to over 700 cents.  

Then, after the trade collectively decided that it had got a bit too heated, the market crashed down to 520 in a matter of two or three weeks.  

Now on the rebound again the indicator is back at 580 and looking like heading higher again.  Great news for growers in New Zealand, troubling news for those in the trade trying to manage a position, and frustrating for processors and manufacturers trying to plan ahead for the new season.

Back on the other side of the globe in South African the wool market also resumed proceedings this week and although it tended to follow the direction of the Aussie market the decrease was less pronounced as European entities in particular flexed their muscles to get some quantities of their high spec wools while they could.  

Since the Cape market went into recess on June 10 the Aussie market has eased by around 7.4 per  cent, but the Cape market indicator was only down by 4.6 per cent this sale which is perhaps more indicative of where the actual market floor really is.

In Australia the market found its level fairly quickly on Tuesday.  

Everyone had decided that the market would be cheaper than before the recess due to the cautious approach from the processing trade which was not willing to take too much stock until they saw some actual firm orders.  

However, this has led to a vacuum building and there is virtually no greasy stock available in China at present which will exacerbate any jump in prices down the track.  

Nevertheless, despite the cautious approach the market for better quality wools was more or less unchanged, and the market as a whole quickly found a level and began to form a base from there with currency taking control as the US Dollar’s weakness over the past month came to the fore. 

Elsewhere across Asia seasonal typhoons are wreaking havoc on shipping schedules and the high temperatures are keeping consumers in their summer clothing.  

The large volume of Lamao products – essentially the fluffy knitted fabric that has become the new fashion item in China –  are waiting in warehouses hoping desperately to be sold once the weather cools down. 

In Korea last week “Preview in Seoul” was run by the Korea Federation of Textile Industries and was the premier textile and fashion exhibition for the year.  While not just wool focussed,  the number of woollen manufactures, spinners, knitters and weavers hosting booths was quite high, and visitor numbers were good, and the mood was upbeat despite the challenging year many have endured with disrupted supply chains and higher energy prices.

With some good news in parts of the global scene, and once the calendar progresses into the fourth quarter demand for wool will certainly increase, driving the market higher.  Providing of course that the wheels do not fall of the economic wagon, but for those with a glass-half-full approach things are looking pretty good.