The encouraging signs of last week’s positive market activity quickly dissipated at this week’s Australian wool auctions. The steady prompt demand out of both China and India largely disappeared, and European purchasing remains scarce. With China again being dominant market buyers, the foreign exchange rates (forex) of the Australian dollar (AUD) against both the Chinese Yuan/Renminbi (CNY) and US dollar (USD) played a very negative role with the cost of that forex now 3.1% worse for auction sellers locally than it was just 10 days prior. The coupling effect of demand, forex and high volumes of similar supply conspired against any chances of market gains or indeed stability. 

A very high percentage of Merino wools on offer this week were in the superfine category of finer than 18.5 micron. These wools struggled to achieve any sort of additional competition without the usual historic strong involvement and premiums from European based operators. Unfortunately this weakness of purchasing intent from our luxury markets coincided with a designated superfine Tasmanian sale offering in Melbourne and subsequently lower clearance rates (86%) were registered nationally, but even much lower clearances were felt in that speciality area of supply.

Australian wool exports from ABS data as at end November 2024 showed China remaining as our dominant importer. Compared to the same point of last season, China has increased their percentage share by 1.2% to see 85.8% going there, even though the total volume exported to China is 8.4% lower year on year. Total export volumes are currently running similar to AWTA key test data (-9.8%) by sitting 9.5% lower than the previous year.

All importing nations for the first 5 months of the 2024/25 season have seen much lower volumes of Australian wool being imported. The largest drop off for our major manufacturers comes from the 31% less wool that Italy has imported thus far, and concerningly following the 28.8% drop in imports by Italy for the season prior in 2022/23.   

The two dominant trading exporters (almost 30% of all purchases for the season) led buyers lists again but were ably supported by the Chinese manufacturers. Key indents were missing from the auction this week, after setting the pace within certain types last week.

41,000 Australian bales next week.