This week’s Australian wool auctions produced positive price gains for all types on offer. The Merino sector was the most sought after and finished selling at a general 40 to 70ac dearer. The very small volume of better super fine descriptions finer than 18 micron were extreme in pricing at times, with some individual lots fetching 150/200ac more than last week. Some slight gains were also seen within the crossbred and carding sectors, but only to the magnitude of 5 to 10ac higher.

A softer (-1.6%) AUD against the USD helped the local Aussie dollar prices this week. Most of the price gains came about due to the more advantageous foreign exchange rates, but the slightly improved interest saw how reactive the market is at present to the slightest hint of better demand. This is also indicative of a rather low greasy wool inventory being held by mills overseas. 

The competition was somewhat limited across buying companies within the Merino fleece sector, but the purchasing intention from a significant Chinese indent gave a large impetus to the ruling price levels. The intention to secure supply from that indent was obvious and apparent early in selling, so the competition soon figured out that to complete orders they had to compete. This was particularly evident in the best specified wools 16 to 18 micron. Indian and European purchasing was evident, but less competitive as AUD prices rose.

The buying from China, away from the indents in the market, remains subdued at best . The fight to combat covid under a zero covid policy continues to impact negatively on the ability of Chinese factories to purchase wool “normally”. In fact, the purchasing from the top three top makers in China has been vastly reduced the past three weeks or more.

Many of the Chinese mills are manufacturing largely for their domestic retail markets which is thought to be operating to sales that are less than half of their normal selling. It was reported this week that over 400 million Chinese people are affected by strict lockdowns still which will obviously affect the ability to sell fashion goods, particularly the higher end and priced suits, coats, jackets and ladies formal wear which generally rely on a bricks and mortar outlet to transact to customers. 

Next weeks schedule has 38,000 bales to be offered on Tues/Wed.