Australian wool market comes under serious short term challenges

Most of the pressure is ruminating from raging inflation driven largely by escalating energy costs.

This confidence will not resolve until there is some change in the unrest in Russian V Ukraine war. Adding further pressure to the wool market is the re-election of the Chinese President Xi Jinping and the CCP appointment of “president for life” impacting enormously on the Chinese Economy already under huge economic pressure from his COVID shutdown policy.

Next week the national offering totals 35,949 bales and the lower volume is reflecting the impact of the extraordinary weather conditions being experienced in the eastern states over the past 2 months.

As you would all be aware, shearing has been substantially delayed as well as the increased difficulty of getting wool from farms to broker’s stores. There are many main transport routes being closed or severely restricted which may have an impact of wool deliveries to the dumps post sale.

The AWEX EMI closed on 1261c – down 37c at auction sales in Australia.
From the 39,023 bales offered, just 80.3% of the offering cleared to the trade and predictably 20% of the sellers resisted the lower price basis on offer. The key factor for the recent market remains in generally weaker demand with the largest buyers remaining balanced between the Chinese and Indian Indent exporters, the Australian Based Trading Exporters and the large Chinese Processors. The EMI fell 31c to 803c US which is heading back to the early October levels.

Merino Fleece led the weakening price trend, 17-20.5 µ MPG’s fell between 20-50c on the opening day (Wednesday) and continued to fall on Thursday with losses in the MPG’s. The more stylish and better specified fleece lots attracted slightly better competition, whilst the lower style, higher VM and poorly classed and specified lots were more affected.

Merino Skirtings seemed to resist the fleece trend temporarily but as news filtered between the selling rooms of the weakening trend in the fleece, the skirtings followed suit falling 20c across the board on Wednesday and fell another 20c on Thursday before regaining 10c in the final hour.

Crossbreds opened 5-10c cheaper on both days with the coarser microns (>29) remaining largely unchanged with the under prepared lots most affected. Well classed and specified lots were least affected as the Crossbred sector is still trading at historic low levels and desperately looking for some sign of positivity.

Cardings generally fared pretty well compared to the combing wools. Small losses of 6 and 14c were recorded in the eastern centres whilst the Western MC rose 3c. Crossbred oddments seem to be finding balance in seller and buyer expectations, allowing better clearance at the low price basis.

~ Marty Moses, Moses and Son