The AWEX EMI closed on 1213c up 1c at the opening auction sale for 2024, after a 3-week recess over the Xmas and New Years holiday period. The AUD – USD exchange opened similar to the closing exchange levels and consequently the EMI in USD terms closed the week up 2c.
A total of 50,884 bales were offered this week which was the largest offering for 8 months and the largest January opening sale for three years. 90.5% of the bales offered cleared to the trade with the largest purchasers coming from the Australian based export companies, Chinese Indent operators and large Chinese topmakers.
The sale took a little while to find its level on Tuesday before weakening. The slightly weaker tone continued into Wednesday in Sydney and Melbourne and Thursday in Melbourne which required an additional selling day due to the additional quantities accumulated over the 3-week recess.
As we launch in to 2024 full of positivity and hope for better markets for our products from our sheep enterprises, we need to consider the light of economic pressures on our customer, and the pipeline that services the purchaser of our goods.
The Post Covid era has sent shock waves throughout the world’s major economies, in addition we also have several areas of ongoing unrest and conflict that are creating further negative impact. Economies around the world are predicting slow and subdued growth in 2024.
China, our largest export destination who has a huge domestic appetite for wool apparel and knitwear, is entering into a “new normal” of lower, but potentially better-quality growth.
India (our second largest export destination for Australian wool) has posted a GDP of 6.3% and is expected to grow at 6.1% in 2024. In fact, India is the only major economy that is expected to grow their GDP in 2024 above their 10-year average.
They have also increased the volume of wool purchased over the past year. The Euro Area posted a 0.6% GDP in 2023 and is expected to reach 0.9% GDP in 2024. Of course, we cannot forget the world’s major economy, the USA, which is entering into an election year that is currently playing out in the supreme courts. As a major secondary market for wool garments, we cannot discount the impact of the US 2.4% GDP in 2023 nor the impact of significant slowing of growth the 1.5% in 2024.
This week the offering increases to 55,660 bales (the largest offering in Australia in 11 months) and I feel that further price pressure may be applied to the larger offering next week.