A rather rudimentary Australian wool auction series was the main outcome of this week’s action. A very uncomplicated auction environment coupled with an unusually sedate Australian dollar (AUD) to produce negligible alterations to established wool price quotations. The largest Australian exporter led buyers list week across the Merino combing wool sector but also featured on carding and crossbred boards. China’s largest top maker provided the stiffest of competition, but price setting was mainly done by a few Chinese and Indian indents requiring better specifications and some direct to mill buying orders looking for the same quality. 

Some notable prices were paid this week, notwithstanding the general unchanged nature of the market. These prices fetched around 10% premiums and almost predominantly for the highest accreditation sale lots or the best quality and properly prepared wools on offer. This was on wools testing from 14.4micron right through to 20micron, although quantity limited. 

Demand for traders from offshore was just good enough to hold the market in place, despite the concerningly low volumes on offer now. The bid prices being received by local exporters are increasingly skinny. Potential margins are being reported as almost zero to none/loss making, yet every opportunity to at least attempt to cover overheads is being sought in the very tough trading circumstances. 

The same economic circumstances are being felt right across the local industry here in Australia, with the obvious effect being placed upon wool growers’ production and incomes being lower despite the stability of pricing the past few years. The knock-on effect of the 10% to 15% loss of bales is also having impact on our wool selling brokers, the test house, logistic and ancillary wool companies. 

Competitive pricing to local supply chain partners is often the lure to show growth—i.e. increase client base, but with the inflationary squeeze on all parts of the macro economy, opportunities to reduce cost to existing and budding new customers in Australia are slim. Local wool business owners and managers are all having to look for operational costs for savings rather than forcing price rises onto an already cost pressured industry.  

Around 23,600 bales are being offered next week, with Fremantle not offering due to the usual low availability of shorn wool at this time of year.