After a rather sluggish start to the selling week at Australian wool auction sales, the market showed some signs of positive activity on the final day. The signals were all negative on the first day of operations and prices drifted as the market looked for a level at which new business could be conducted. By day's end levels on all wool types and descriptions were trading 30ac/clean kg lower. Overnight on Wednesday though it was being widely reported that better trade opportunities existed, not only from China, but India and Italy as well. Those encouraging signs were immediately transferred into the sale rooms on Thursday with a handy 20ac recovery in prices, and almost eliminating the losses of the previous day.

The AWEX EMI (eastern market indicator) finished the week at 1558ac/clean kg which was 14ac or 0.9% lower. A similar softening of the EMI when expressed in USD occurred with a 0.8% or 10usc/clean kg devaluation. Still, these levels remain in heady territory being 18% higher in AUD and 24% higher in USD com-pared to the wool values being paid at the same period last spring.

Being a designated super fine sale in Sydney, it was highly motivating for growers of those traditional spinners types to receive the significant premiums they extracted from the market. In the individual micron categories of 18.5 micron and finer, it was commonplace for prices to be at least two dollars per kg above that of their top making styled counterparts. The truest of the spinners types fared even better, with three to four dollar per kg premiums being paid. Whilst Chinese and trader interests provided some healthy competition, the Italian interests exercised their buying strength and bought almost the entire selection, apart from the odd lot or two. It appears that Chinese wool interests are well and truly intent on bringing back the premium to traditional super fine wools.

The buying patterns emanating out of that country and indeed other wool-processing nations, appear to be strengthening as more mills are setting their sights on filling their supply chains whilst the good volumes of wool are coming onto the market. The last six months has seen some weaker periods in the market, which is most likely understandable at these levels, but in almost all instances, the weakness lasts just a week or two at best. Following surges in the market we seem to be experiencing a short lull, then a swift retreat and then a steady recovery which inevitably places the market average price above that of the previous surge. Exactly when this trend changes is unknown and now likely dependent on the willingness of the consumer to keep buying wool at retail.

The general Merino fleece and skirting market tracked similarly this week, with 18 micron and finer par to 20ac dearer and types 18.5 and broader 5 to 20ac lower. The West values played catch up after having last week off, hence the larger falls recorded. Crossbred (26 to 30 micron) wools sold 30accheaper again and cardings averaged prices of 15ac lower.

Auction sales next week in Australia have on offer around 43,000 bales . Sales concluded strongly this week so hopefully that is a good insight as to the fortunes on next weeks activity.

AUD Commentary - SAW

It was a remarkable week for the Aussie Dollar, with a rally on Thurs-day to a high of .7995, and a failure to break .80 cents, being swiftly followed by a 120 point fall that afternoon, to an overnight low of .7870, before a late 70 point surge Friday morning to .7945 on a sell-off in the USD. The USD fell as global traders saw the Korean conflict ease, and there was position squaring ahead of tonights all important U.S Employment Report. The trigger to USD fall overnight was the surprise to the Federal Reserve’s measure of price pressures which rose by just 1.4% in the 12 months to July, leaving it at the lowest level since December 2015, and takes it further away from the Fed’s 2% inflation target. The USD was also undermined by comments from US Treasury Secretary Steve Mnuchin that a weaker USD was “was better for Trade”.” In a sense it was business as usual for 2017’s main themes of USD selling, Bond buying and a rally in Equities. The S&P500 lifted in overnight trade to just under its record high, as Global stocks capped off August with their 10th straight month of gains. Meanwhile the USD Index which measures the USD against a basket of six major currencies, fell for sixth straight monthly decline in August. The lift in global Commodities this week is seen as supportive for the Aussie, and Friday’s release of Australian Manufacturing data surprised showing the fastest expansion in 15 years, and also backs this week’s ABS Data release showing a surge in Business Capital Expenditure numbers. Technically AUD/USD is seen as capped at 80 cents, with medium term support at .7850. Price actions show a developing consolidation pattern. The Charts suggest a further rise is now likely.

Southern Aurora Wool forwards report

Another tough week for the spot market. Prices fell 30 to 50 cents on Wednesday. Growers took advantage with trades early in the week into the need year at solid levels highlighted by January and February traded at 1800 for 19.0 microns and 21.0 trading to 1475 for August 2018. As with last week forward prices continued to execute in the high percentile bands for key micron groups

Buyers returned to the market Thursday and forward levels again presented strong hedging levels. Anticipated trading levels