Price falls at the Australian wool auctions were largely arrested this week. Some clearer macro-economic signals were delivered globally and this did transfer somewhat into the sale rooms, albeit with demand for new business slow to emerge and tentative at best. What did arise though was some injection of confidence into the market from China’s two largest Merino top makers whom between them, purchased upwards of 38% of the entire sold Merino fleece offering.

The significance of that first stage manufacturing buying cannot be underestimated. The auction methods of operations generally see traders focussing on what to trade (buy/sell) in the very short to immediate term, whilst manufacturers look to see and plan for the anticipated demand a few months out, given the lag time for delivery and processing to their mills. After a few quiet weeks, this appears to be a reset and hopefully reverting to the season long confidence building that was apparent a month ago.

Factors at play this week was a market trying to realign price differences between centres, whilst dealing with the ever-changing forex rates. This was most apparent with our most voluminous centre of Melbourne recording price increases ( +5 to +25ac) on all types and descriptions except for Merino wools around 21 micron (-10ac) and the carding sector (-29ac) whilst Sydney saw reductions of 10 to 20ac on all Merino guides. Fremantle sold at similar levels to last week at their one day only auction.

Crossbred wools of all descriptions were the highlight of the week with gains of 5 to 15ac recorded across the offering. This type sector is generally the most exposed to the vagaries of forex movements, but this week that trend was broken as prices moved against stronger dollar as auctions were conducted. Cardings remained softer in both pricing and ability to readily sell.

Lack of supply will be most evident in the next few months. Drought conditions are prevailing and spreading across more wool growing regions reducing both cut/head and yields, reducing clean weights being available.

Around 30,000 bales are being offered next week, with the WA centre at Fremantle selling just one day, Tuesday.