Last week the wool market took another backwards step. This was not unexpected as reports of little business being conducted with overseas mills and/or at prices at lower than that of current levels.
A fall of the Australian to US dollar could not aid the sliding wool market. The AUD to USD dollar fell from 67.9c to 67.6c.
The AWEX Eastern Market Indicator lost 16c and then a further 9c on Wednesday and Thursday respectively to close off at 1530c.
The West Australian indicator lost 15c over the week to close off at 1640c. In US dollar terms the EMI fell to 1035c.
The market retraction flowed online to AuctionsPlus with only one line of crossbred fleece selling. This lot was a line of 26µ micron fleece wool, with a low 0.2% vm.
This lot was branded CORALYN PAST COY/G.T.H., offered by Jemalong Wool and sold for 800c greasy or 1171c dry.
The current market hasn’t seen positive growth since the 13th November. The larger quantities are no doubt seeing buyers spoilt for choice. However, it is the upcoming holiday periods are what is impacting the market. The Chinese New Year starts around the 25th of January.
The mills will close down for at some 15 days. Coupled with the Australian Christmas and New Year’s period shipping dates are impacting demand. Any exporters without orders over this period will need to finance the wool until mills resume their processing.
Interestingly, The Chinese Lunar New Year is such an important holiday, that the Chinese Vice Premier Hu Chunhua, announced that the country must resolutely work to achieve the target of recovering pig production numbers and stabilize their pork importing supply for the upcoming holidays.
On the wool side, there still will be speculators buying if they see attractive levels, however, it is expected that the market will not rally with any significance in the short term.
Looking forward, there are three more weeks of selling before our Christmas break. This week sees an estimated 41,000 bales on offer, with 39,000 and 37,000 in the following two weeks.