Wool holding firm in face of turmoil

SOME had talked about an easier market and the currency market gyrations certainly supported that theory before the Sydney auction commenced on Tuesday.

From that point on, however, it was clearly dearer for better wools although the increasing volume of poorer style wool taking its toll towards the end of the selling week when Melbourne sold their final catalogues on Thursday.

Not many combing mills can absorb yields in the 40s or more than 3 per cent VM so a large proportion of the wool on offer struggled to find more than one or two buyers and the indicators suffered accordingly.  

The bread-and-butter wools and those of the best style had no such problems and the overall tone for the merino market was very positive as were the skirting and carding markets.  

The crossbred market continues to flatline in USD terms, which with a local currency nearly a cent and a half higher against the American Dollar showed up as a decline of 20 cents for the week.  

Buyer fatigue seems be creeping into the crossbred market locally, but as usual at this time of year the sheer abundance of first and second cross lamb’s wool on the market saturates the few orders which are around for them.

Some of the finer crossbred lambs normally find their way into blends with merino fleece to go into the cheaper suiting fabrics for the Middle East buyers including Iran – but those orders are obviously not happening.

The New Zealand market continues to be very firm with only the South Island having a sale and good demand from China, Europe, UK, India and Australasian mills all contributing to a solid result.

After a truncated selling week in Australia to accommodate the public holiday in some states the final washup was a rise of 16 cents in the AWEX EMI, but in US Dollars the increase was a more substantial 35 cents no doubt causing a grimace for those traders who had predicted or hoped for a flat outcome.

In Euro terms the increase was higher still with a 36 cent jump which equates to a 3.4 per cent rise.

In China the local buyers saw a more modest 2 per cent increase but that still added nearly 2 RMB per kilo to their purchases.  Over in the Cape the market was 1% dearer overall but interestingly the certified merino indicator barely moved.  

The price premium for certified wools has declined over the past couple of weeks from around 10 per cent to its current level of more like 5 or 6 per cent.

The major demand for this certification has always been from Europe firstly and American customers second, and Europe is still more than a month behind the price curve of this market, so it is likely that fresh orders for certified wools are just on the backburner until Europe decides to catch up to the current price level.

All in all a very strong market with low supply still driving a fair degree of the action, but also Chinese domestic demand pushing things along in their usual seasonal upturn.  

There are the usual plethora of uniform orders flowing through the pipeline in China as the military, police etc order their new garb.

No doubt the rampant increase in the polyester price over the past couple of week will make some of the calculations a bit more difficult. A 30 per cent increase in the price of plastic has made this less straightforward.  

This week expectations are again for a firm market, and anticipations or hopes of most are for a firm/unchanged market in USD terms.  Where the currency takes us is anyone’s guess.