Despite the slightly lower prices in Australian dollar (AUD) terms this week, some better signals were flowing through to the trade. As the AUD continued its recovery against the major trading currencies, overseas users largely followed the US prices upwards and were prepared to pay the few extra US cents or Chinese yuan (CNY) per kg to stay in touch with the market. The activity of the Fremantle market was more an accurate reflection of that positivity as the Western Indicator gained a healthy 1.5% in US dollar terms for the series.

The pre-sale show floor talk amongst buyers centred around a larger forward availability of contracts from almost predominantly China. Many new contracts had been reported but at an extremely sharp pricing basis to the advantage of the overseas buyers. On top of the already committed business slated into the February and March delivery periods, this puts the market's immediate fortunes not just into the supply volume column, but also the wool type make up of that upcoming supply.

The superfine Merino wools finer than 18.0 micron continue to hold the overall price indicators back. Prices this week for those qualities dropped off a general 20 to 30ac/clean kg, but for some lower specification types (largely the high CVH% sale lots) fell away 40ac. Their broader Merino (>18micron) counterparts largely held ground against the adverse forex pressure, with some better quality lots in the 19-to-20-micron area in particular strengthening as the tougher season in many growing areas affects quality. 

February is traditionally a high-volume supply month of these super fine wools and this year has coincided with a very lacklustre demand scenario arising from the Italian markets. On top of this, dry/drought conditions in a few of our super fine growing regions has resulted in quality issues - mainly tensile strength- preventing some clips from taking their usual routes to processing in Italy. It was notable that this week though that the few best spinners clips on offer were receiving some large (200ac +) premiums from the luxury weavers of Italy.

The two largest Chinese top makers led the buying activity this week, with traders having to lift levels to compete later in the week.  41,000 bales are being offered next week on Tuesday and Wednesday in all three centres.