This week’s Australian wool auctions were a rather static affair with minimal price movements recorded.  With the Western Australian market at Fremantle not in operation, it was left to the two Eastern centres to provide the market direction from which provided a very firm result with the EMI remaining at the 1342ac level for the third consecutive week. Good purchasing intent was apparent from all global destination users through their local representatives and a slightly above-average passed in rate of 12.6% was recorded for the weeks’ activity. 

The foreign exchange (forex) rate movements took the USD prices down just slightly. Conversely, the Chinese renminbi had wool prices in that currency heading towards 1% dearer despite the relatively unchanged local indicators. A large jump in the Euro v AUD saw a more expensive buy-in level for imports into Europe. This 2% increase took the prevailing push and urgency out of the market for the better quality lots and resulted in flatter price levels.  

The headline market price determining factor this week was overwhelmingly the announcement that China had lifted restrictions on the import of wool from South Africa. 

In April this year, China imposed an import ban on South African wool following outbreaks of foot-and-mouth disease (FMD) in parts of the country. The South African wool industry had measures in place to protect the wool and no outbreaks of FMD had been recorded in major wool-producing areas. Approximately 75% of South African wool was being exported to China prior to the ban.

There was already a sharp fall in prices at the recent first auction of South Africa’s 's new wool season and many trade commentators cited the Chinese ban as the predominant reason. An even greater impact was expected if the Chinese ban had remained in place. 

It is expected a few weeks of global auctions will be necessary to establish price trends and demand under the full market participation regime. 

Australian buyer’s lists this week saw China’s largest topmaker leading the way with strong support from Australia’s biggest wool trading house and a key Chinese indent operation.  Next week is a designated super fine sale week with 39,000 bales on offer.