The buoyant sale room atmosphere continued with gusto at this week's Australian wool auctions. Local buyers were in the mood for purchasing , which placed nearly all prices on a strongly upward trajectory from the outset. The most well sought after commodity were the Merino wools from 19 to 22 micron which pushed 3% higher almost immediately as auctions commenced. The super fine Merino categories were by no means neglected, with a healthy 20ac clean/kg added whilst crossbred wool types and cardings traded fully firm to slightly dearer.

The initial reticence from customers to follow last week's strong price gains was somewhat dismissed this week as those overseas users in need of prompt supply committed to the new price levels. This turned out to be an opportune move as both the auction clean price levels and forex rates (mainly AUD v USD) forced CIF (price in export terms - ie cost, insurance, and freight) prices up even further. Those needing wool for new contracts now the auctions have closed for three weeks would be wholly subject to the closing spot price from those exporters willing to go short or choosing to dispose of any greasy stocks held.

Local traders were largely responsible for the gains of the wool values the past fortnight. Completion of open forward books for July and August shipments combined with a fresh business enquiry to create the dearer market. As higher prices became available from users, exporters were given an opportunity to try and  “average” the old (set) and new contract prices to minimise the projected losses on those out of the money forwards written before the price rises.

The direct China top maker buyers were not eliminated from buyers lists, but certainly had to yield to paying the higher prices being set by traders to acquire supply to see them through the three-week sales recess. Looking from the outside in, those top makers are probably quite pleased with the current market, given the value add to their output of wool top production would be 5% higher than a week ago. 

Wool auction sales are now in recess and will re-commence in the week starting Monday 7th august 2023.