For the third consecutive week, prices at the Australian wool auctions continued to hold up. This is despite the pressures of the much stronger Australian dollar against the US dollar and other currency pairs used in the trading and purchase of wool. Slightly weaker levels in AUD were seen at the Western centre, but largely due to the 2% + adverse forex, rather than a weakening of the current steady demand from overseas.

Prior to the sales commencing this week, the largest wool destination in China had settled into their Lunar New Year celebrations. Replies to offers from local traders were quiet and cautious in activity as per the normal operations every year. Some new business was written before they took the holiday, with many exporters considering this a small hedge against potential price and currency rises in the immediate future, which indeed happened on the forex, making those “insurance” contracts worthwhile short term as one prominent exporter described.

The trade is quite buoyant at the moment and a positive sentiment has been ruling for the past two months. Good steady enquiry with a generally firm market is a scenario not seen for a while and both sides of the trade are seemingly enjoying this stability. In fact, many participants at the first exchange of ownership part of the trade are hinting at better prospects for wool, but with the usual caveats. 

Sitting high on this list is the willingness of factory workers in China to return to work following  their New Year holidays. After most workers visited their home provinces for the first time in many years, some may choose to alter career paths.  The western world saw many changes after lockdowns ended in their countries so it is somewhat expected a degree of change will also occur, affecting mainly the eastern China seaboard located mills. 

The Merino wools of all types sold largely within +/-10ac of their established basis from the previous week. Some odd good spinners/best top making descriptions at the finest end did add a few cents, but these lots were limited in supply. Crossbred wool and cardings were traded at a similar +/- 10ac  movements, making it a rather mundane week as far as AUD pricing goes. Forex rates did force US and other currency levels up by 2 to 3% across the board. The big traders and first stage processors dominated buying. Next week has 43,000 bales available on Tues/Wed auctions.