The wool market continued its negative trend last week, however with smaller reductions as opposed to the extreme falls that the market had taken.
Last week’s retraction was reflected by the AWEX Eastern Market Indicator losing 5c and a further 11c to close off at 1497c or in US dollar terms, 1015c.
Prior to auction there was talk of interest in the market and that business had been concluded in China, and, notably interest online.
Monday morning saw 8 bales of 18.4µ micron fleece wool sell for 1024c greasy or 1595c dry. This lot was offered by Moses and Son and branded R&R/MILLARA. In addition to this buyer, many other exporters logged onto AuctionsPlus Wool.
On Tuesday activity stopped when the physical auctions opened and all the talk of interest slowed. The market saw combing wools of all descriptions reasonably well supported, however it was cardings that took a hit.
Looking forward, this week sees an estimated 35,000 bales to be offered nationally, with the West Australian market open after week’s break.
Online AuctionsPlus has once again received modest pre-auction interest with merino crutchings and pieces selling on Monday.
The recent announcement that China will impose tariffs on $75 billion worth of American goods, to which US president Donald Trump retaliated with a tweet stating that the US would raise tariffs on $550 billion of Chinese imports its not aiding any global markets.
This ongoing trade war has battered confidence, with no clear end in sight. This does not paint a good picture for a market which relies on China to purchase 70% of its product. Notably, very little of that wool actually ends up in the US, but the trade war does not offer much assurance for Chinese financial institutes to lend to Chinese mills.
This current retraction in the market does have the small silver lining that growers who opt or are able to hold onto wool, will be well poised in the future when supply is tight and the market heads north again. When that is, remains to be seen.
-Tom Rookyard, AuctionsPlus