Some very positive results for wool prices at this week’s Australian auctions. Merino  types of all descriptions ranged from 25 to 50ac dearer as increased buying pressure from China activated buying interest from all sectors. Almost all of the subsequent market gains could be attributed to that export destination. Competition from India and Europe was apparent, but their buying success was far more limited than normal.

From the outset of selling on Tuesday, it was very apparent that the cheaper trend of past weeks had subsided and stabilised rapidly. Just as swiftly, the Merino market hit greater heights and prices escalated throughout selling. Unfortunately the crossbred and carding wools were not included in the refreshed interest, but prices were not that adversely affected with just a few cents lost on some sale lots. 

Overnight Tuesday, the Australian dollar shot up 2.2% against the US dollar on the back of the US commerce department releasing data to show inflation cooling in the USA. This had a negative value attached to the US dollar value. The AUD v USD was well into the 0.65 bracket after the announcement, after being 0.635 during the Tuesday wool sales. 

This extraordinary shift in the major Forex pair used in wool export caused initial apprehension from Chinese buyers, but reports quickly filtered through from traders during Wednesday selling that more wool was required and that higher prices were available and being absorbed by off shore interests. This ensured further rises 5 to 10ac were recorded, with some of the week’s best prices being available towards the close of selling in Melbourne and Fremantle. Once again China indents forced the pace.

The strong lead for a dearer market that arose at the end of last week from the Fremantle market closing at the highest values nationally was repeated this week, particularly for 19mic through to 21micron types. Under the strongest competition seen for some time from Chinese indents, traders were forced into paying the new buying level, even if above very recently written contracts under mitigating further risk circumstances.

43,000 bales is rostered for sale next week on Tuesday and Wednesday.