This week’s Australian wool auctions produced some good gains within the entire Merino fleece and skirtings market, but unfortunately the carding sector continues to flounder under weak enquiry. Crossbred wool types have again softened after months of genuine price enhancement due mostly to improved sales and manufacturer requirements for inventory emanating from within China. 

Wool grower sellers remain in sell mode, with 95.3% of all wool offered sold through to the trade. The merino sector was notable in that almost 97% of those breed descriptions were sold. Most of the passed in lots came from the crossbred and carding/carbonizing selection.  

The weaker Australian dollar against the US dollar (-0.65%) certainly aided in the weeks positive results and also lessened the blow to the depreciating levels. The Chinese yuan and Euro also went to the favour of the local AUD prices, so most end users received a buffer against the generally stronger prices being paid at auction. 

The clearer picture of current wool demand arises from the predominantly Merino (98%) market in Fremantle, WA. That WA indicator (WMI) in AUD appreciated 2% for the week, which represented price gains of 35 to 45ac per clean kg. In USD the indicator shifted 1.3% higher, which more accurately reflects the willingness of overseas users and local buyers to accept and absorb the higher levels for the time being.

Strong buying orders/indents from China - and to a lesser extent India and Europe - forced enough additional competition into sale rooms this week to see Merino prices reverse the downward trend. Traders remained keen to secure some supply, but sold levels dictated that the larger part of the offering went to the buy order operators. Direct buying for first stage manufacturers remained subdued, compared to their normal activity. 

Latest news from China shows that their economy grew at a faster than expected rate in the third quarter. This suggests that the Chinese government policy measures are helping to initiate a tentative recovery to the world’s second-biggest economy, and the primary market for Australian wool. 39,000 Australian bales is rostered for sale next week over Tues/Wed schedule.