The additional quantity at this week’s Australian wool auctions allowed the market to ease back to the buyer’s favour. The pressure on prompt shipments for delivery to overseas mills looked to have been satisfied by last week’s sales and also from buyer’s stocks on hand. From the time the updated auction volumes were made public last Thursday, the steady enquiry and new business opportunities, from mainly China and India, dried up almost immediately. This flagged to auction buyers the potential or likelihood of cheaper wool being available this week, which is exactly what transpired.

The spot markets for wool since the onset of the pandemic in 2020 have been very much influenced by the ruling sentiment of the day; both positive and negative. Any significant difference to basic trading circumstances or macro economics seems to have a greater bearing on those spot wool price setting factors. Additionally, the open cry auction system is a very emotive environment so over reactions to day to day positions have to be considered and recognised as a factor in prices offered. 

Last week saw an obvious lift in demand which saw the market respond swiftly and strongly appreciated in price. This week saw the reverse apply where an additional 12,000 bales or 25% was added to the auctions in response to the price rise. That significant and abrupt supply increase acted as the catalyst for sentiment to be turned on its head, hence part of the reasoning behind the price retractions on almost all types this week. 

The AUD v USD forex rate continued to go to the local AUD price advantage (-0.5%) week to week, but this only tempered the losses. Merino wools of all descriptions were anywhere from 35 to 50ac cheaper with all of those losses occurring from the first lot sold at the opening on Tuesday. The Wednesday and Thursday auctions were a much truer refection of the past few months and prices held their own at the new basis. In fact, some better signals were emerging towards the close. 

Crossbred wool type prices were in contrast to the Merino sector with small gains achieved. Heavy buying from Chinese indents underpinned this sector, with strong support from the local traders who have managed to sell a few orders for reasonably close in delivery. Cardings remained firm unchanged.

57,000 bales is on offer next week as we catch up after wet weather induced shearing and delivery into store delays pre the New Year.