Following the strong price surge at the opening week of Australian wool auctions, larger than expected volumes were put up for sale this week. Despite some slightly lower returns felt when measured in Australian dollar (AUD) terms, the market stood up relatively well against that short term supply increase. In US dollar (USD) terms, general values were upwards of 1% dearer with the difference in forex accounting for that entire gain plus some.

At the start of the week, exporters reported selling for new orders was available but sporadic. Prices being offered were “around to under market”  for those willing to book forward. As the week progressed on Monday through to Tuesday evening, volumes to sell became more readily available, but the strengthening AUD against the USD somewhat halted that enthusiasm on both sides of  the trade for taking too much on board without risk coverage or supply surety. By Wednesday enquiry had seemingly reverted to intermittent once more as the AUD edged towards 0.63 against the USD.

Whilst all Merino prices were traded under a much more subdued environment this week, the underlying tone of buying remained quite buoyant despite the lowering of prices by  general 15ac for the week. The better specification sale lots were less affected as the current offerings are being hampered somewhat by a larger percentage of harder to place wools having lower strength (nkt) and higher position of break in the middle (PobM) readings. This results in calculated coefficient of variation hauteur (CVH) readings well into the 55% to 60% range. Most standard China contracts orders require a batch average of 49%. Crossbred wool types and cardings unchanged..

Buying was dominated by the two largest trading exporters and the two large Chinese top makers. These top 4 took over half the overall volume on offer. One of the Chinese top makers buying was much stronger, possibly due to their not attending next week's auctions due to Chinese New Year staffing.

The up coming selling week coincides with the Chinese spring festival (New Year) holiday. Most of the Chinese factories, manufacturers and traders will   allow staff 3 days to a full week or more off work. South Africa will suspend their wool auctions for the week. Australian wool auctions will continue and there is currently around 34,000 bales to be offered over Tuesday and Thursday. Wednesday will have not sell to allow for the celebrations in China.