Largely negative results occurred this week at the Australian wool auctions. Just a few isolated types showed any resistance to the generally weaker prices being offered. Buyer confidence was low from the start with a diminishing levels of enquiry from China prompting cautious purchasing activity from most operators. As a result, the national clearance rate dropped off to 85.8% of all wool offered sold into exporters hands.

The Eastern Market Indicator (EMI) closed 1.6% lower or 21ac to 1319ac/clean kg. Due to the Australian dollar (AUD) depreciating against all major currencies by 1% for the week, all prices expressed in foreign exchange rates went further to the favour of the off-shore buyers, making wool prices far more attractive. The USD EMI fell 26usc or 2.6% to a week’s close of 972usc/clean kg, indicative of the present softer demand. The Western Market Indicator (WMI) fell 24ac to 1378ac/clean kg, with a lower clearance of 80.3%. 

China demand is remaining somewhat subdued as a few dominant factors impinge upon the normal supply chain operations. Restriction of power as a coal shortage and environmental targets regime are being enforced has led to most factories being electricity rationed. In many instances this means a three day working week, obviously limiting needs for raw material inputs, factory production outputs and pay to employees whom are ultimately consumers. Zero covid tolerance policy is also an inhibitor. These factors have all led to the current sluggish Chinese domestic demand for goods and more-so, the luxury goods sector that most wool garments fall into.

Conversely, the purchasing activity from European and the sub-continent has been the best seen for a few years. This renewed buying interest has helped the market hold on relatively well, particularly at the super fine (less than 19.0micron) end of the type spectrum. 

This week’s closing market quotes had most Merino fleece and skirting 30ac lower for the week, crossbreds at the finer end (25 to 27micron) were 10ac dearer, broader crossbreds 20ac cheaper and cardings unchanged. Two of the largest traders plus the major Chinese top maker dominated buying lists. 

Next week has 45,000 bales being offered on Tues, Wed and Thursday.