Alongside the rest of the world, Australian wool auctions operated under the most tumultuous week of confidence sapping factors seen for quite some time. The well publicised tariff imposition by the USA on all its trading partners has caused absolute mayhem across all markets and the wool and textile world was no exception. 

All participants grappled with the potential outcomes and consequences of these third party actions. Our major trading partner in China was the most heavily targeted of nations yet they stood tall in this weeks auctions and continued purchasing operations to a relatively normal, stable and well measured strategy. This helped impart confidence to the local operators and our largest trading exporter subsequently maintained a heavy buying rate. 

Thankfully in some sense, our ridiculously weaker Australian dollar against almost all other currencies on the foreign exchange (forex) boards stepped in to keep wool prices stable and in fact pushed dearer for the week in our local currency. The real story though was wools devaluation by 3.1% to 4.2%  on a Chinese Yuan (CNY) and US dollar (USD) basis respectively and an even heftier 6.5% lower value on buyers using the Euro. 

IF things normalize from here on and those forex rates remain in play, this week could turn out to be a bit of a boon for sellers getting paid in AUD going forward. On the surface, wool is now looking good value in all those foreign currencies given the world was seemingly heading into lower inflationary and lower interest rates environment prior to this weeks events. 

The 2021 IWTO produced figures show that the USA imported 20,867 tonnes out of the 219,793 tonnes imported by countries across the globe of finished wool and wool rich garments and fabrics. That represents 9.5% of the worlds wool apparel/products from all nations so minimal increased consumption from the rest of the worlds consumer markets could easily absorb this rather than sell into the US at a 104% tariff (China) or Italy at 20% plus rates.

Next week has 18% more wool than last weeks advice and sees over 43,000 bales being offered.