The EMI finished the week at 1492c, down 38c on last week.
In USD terms, this equates to 1020c, down 15c. In Sydney, 17mic wool finished the week at 1908c, down 72c.
The one exception to the negative trend was cardings, which held firm on last week. Reports from the auctions suggest a few key issues at play here.
With the Chinese New Year falling on the 25th of January next year, last week was the last opportunity prior to Christmas to ship before Chinese mills shut down for the period. Doing business with China in this period is notoriously slow and expensive. Wool being shipped to China will need to be stored until mills are reopened, which further diminishes an already tight margin.
This all coincides with an influx of supply from growers, and a strengthening Australian Dollar.
Looking at the charts, from the first of December the AUD has risen sharply against the USD and CNY.
This would have made current prices less attractive. These factors came together to push prices down, which saw passed in rates increase dramatically to 19.9% as growers desired value was not met.
Looking forward, bales offered will increase to 48,500, up 23%. The continued influx of supply suggests the coming weeks auctions will remain tough, unless there is a sudden increase in buying pressure globally.
With the Australian and Chinese holiday periods spanning December and January, it is unlikely that we will see any major change in price or demand until February. Weaker trends were reflected online, with just the 25 bales of merino fleece selling.
This lot was a line of 21.54mic merino fleece wool, with a 1.8% VM. The lot was branded BMCK, offered by Elders South Australia and sold for 1207c greasy or 1738c dry.