Recess is time to reset and make plans

A RATHER lacklustre close to the auction season last week with some buyers absent, some tentative and only the largest topmakers really showing any desire to pick up quantity,  although some of the Italian fraternity did step up and accumulate quite a few bales of their better types. 

A large volume of broker interlots and bulk class bales added volume but not quality and these wools, along with some other poorer quality clips,  weighed on the overall indicators. 

The AWEX EMI closed down 28 cents in local currency terms although in USD terms the market was reported only down by 18 US cents. In Euro terms the market was 12 cents cheaper and in Chinese currency the market eased by 1.12 yuan per kilo.

The few new season superfine clips on offer sold very well and brought the Italian buyers out of the woodwork as the previous sales had been bereft of these superior wools with the exception of one or two clips which had been held in store for a long period of time. 

While most Italian principals normally eschew positivity as a normal description of everyday business some at least are actively talking in glowing terms about the current season.

The general increase in wool prices has meant that their older stock is relatively cheap, and the growing acceptance of the price trend has made the conversations with customers easier. 

Despite the calamitous perceptions in the media they feel that once summer holidays have been enjoyed and everyone returns to work refreshed and rejuvenated business will kick up another level to cap off a very positive year.

Similarly, in Asia there is a feeling of relief that the auction recess is now upon us and traders and processors can take a break and worry less about where their next sale is coming from. 

Business has slowed to a point that it has become very difficult to find any customers willing to put pen to paper.

Any business which has been done recently is taking an inordinately long time to conclude and facilitate shipment for as hesitation grows. 

For those who have been proactive and continuously buying and selling it has been a very profitable period, and the worry about losing these gains has driven many back into their shells to wait out this normally slow time of the year.

So the recess now provides a good opportunity to reset and make plans for the remainder of the year. 

In mid-September the trade will gather in Jiangsu Province in China for the annual Nanjing Wool Market Conference which often provides a spark, albeit sometimes short-lived for business activity in the new season. 

While the conference is too early to provide an indication of retail activity which doesn’t really begin until October just the presence of so many buyers and sellers in one room often leads to a surge in business. 

Until then we can expect a fairly lacklustre, directionless market once sales resume again following the three-week recess, but that is entirely normal for the wool market and will not concern too many.

It will perhaps provide enough time for some of the global hotspots to sort themselves out and find a resolution.

The price of Brent Crude briefly reached triple figures again last week – for the first time since May. 

This not only adds to the inflationary pressure on the global economy but also more pertinent for the wool industry drives up the price of synthetic fibres. 

While this makes the comparative price more favourable, it does also increase the garment price of those which are blended with merino to achieve a technical aspect or the commoditised wool/polyester uniform type fabrics. 

Those purebred operators producing a 100 per cent merino garment will fare much better depending on the stability of the global economy, which is obviously not a given at present. 

Europe appears to be faltering on its economic recovery path with the European Central Bank again being forced to look at raising interest rates to slay the inflation dragon once again, and the on-again, off-again tariff saga coming out of Washington is stymying global trade. 

With many of the Liberation Day tariffs now deemed illegal the messy refund process is underway, but for many importers of goods into America tracking down the customer to whom the tariff refund is due is nigh on impossible. 

These funds may simply go back into the kitty, but that may actually help kick-start the next round of business so it may generate a positive flow-on effect eventually.

Wool growers across the southern hemisphere will no doubt be nervously watching global markets for signals and indicators of proceedings for the third quarter while the Middle East and currency markets add further uncertainty to the mix. 

Many are of the opinion that things will be better later in the year as highlighted by the relatively high pass-in rate last  week, and supply is certainly still going to be constrained for the remainder of 2026 keeping the upwards pressure on prices. 

All going well we should see another rally for the wool market in the latter stages of the year but there is a lot of water to pass under the bridge until we reach that page of the calendar.