A sharply devalued Australian dollar (-3%) against the US dollar failed to halt the declining wool prices at this week’s Australian wool auctions. The forex rates available did assist in limiting the falls in AUD though, but most categories of super fine Merino (finer than 19 micron) still fell by around 85ac or even greater whilst the broader Merino types were 25ac cheaper by the close of selling. Most of the crossbred wool types and carding descriptions held and even managed to add a few cents.

In addition to the exchange rates assistance, the vastly lower quantities available of just 28,000 bales this week also helped to avoid even cheaper price levels. Whether this was by seller design, indication of fresh wool available or purely due to the continuing wet weather affecting shearing and truck movements for delivery ex farm remains to be seen. With over 15% more wool sold to the trade this season already, perhaps the build up of grower’s stocks is minimal, which will be good for eliminating quantity for sale as a major factor determining market prospects when the tide turns.

The degradation of the US dollar wool price indicator (-4.8% this week) is significant and indicative of the slack demand affecting values. Exporters report new business is sporadic, specific to type sectors and very limited in volume. All segments of the supply chain continue to act with risk-averse strategies. Market support immediately dissipates upon order completion, with little appetite for stocktaking at the greasy stage locally.

It has been quite a while since the auction market has seen the dominance of just the one company in wool buying. Over 33% of all Merino fleece sold this week was purchased by China’s largest top maker as well as that entity accumulating almost 19% of the skirtings. China’s other first stage manufacturers were in supporting roles only as were the top three trader exporters. 

European and Indian orders remain intermittent, and volume limited with European manufacturing space practically non-existent for any new opportunities. The super fine spinners and best top making wools finer than 18 micron destined for the two main Italian cloth makers remain in premium price territory of around 240ac and even more for NM certified sale lots.

The purchasing at auction by the key crossbred wool indent operator for China assisted prices remaining firm to slightly better in that area and the same result arose from Australia’s largest woollen manufacturer’s activity in the cardings room. 

As confidence seemingly slips in other areas of the wool trading environment, the owners of the largest amount of machinery globally remain steadfast and supportive in their buying operations.

Around 38,000 bales are to be offered next week on Wednesday and Thursday again as NSW and SA have a  public holiday on Monday.