The extremely low supply on offer this week at Australian wool auctions could not sustain Merino wool prices at current levels. A dearer Australian dollar (AUD) against both the US dollar USD(+0.7%) and Chinese Yuan CNY(+0.5%) deflated the local auction environment. Notably, the market when viewed in both those heavily used currencies to buy wool, the overall market was actually a touch dearer (+0.4 to 0.5%) indicative perhaps of a demand scenario trying to match supply whilst volumes are so small.

Most exporters reported that being able to sell anywhere near profitable levels was becoming exponentially more difficult. China does remain in the market but not with as widespread interest as is usually seen. First stage top making buying for that country did lift again with the two largest taking over 30% of the Merino fleece. India had been in the market but noticeably weaker enquiry the past two weeks. European activity remains subdued at best, with evidence of purchases designated for that region being negligible and when apparent, only on the better end of the market, which is a very low volume sector of the offering at present.

Under the current global trading atmosphere, the taking of stock into inventory is becoming frowned upon again. The risk is mostly being considered as too high. This sees some harder to place wools becoming somewhat neglected and less competition applied to those sale lots. The strength of Chinese top maker buying this week though saw those lots not as price affected as they could have been in larger offerings.      

The crossbred wool types and carding types defied both the soft sentiment of the Merino fleece segment and the adverse forex rates on offer to forge into higher territory. Crossbred wools were a general 10 to 20ac dearer as were most types within the carding and oddment sector. 

The penchant of wool grower sellers wanting to offer and sell was again clear in sale rooms this week as just 8.3% of the selection failed to meet grower reserves. re largely committed to off load their product, with clearance rates above 90%.  

Approximately 22,000 bales are being offered next week 51, but due to lower availability of wool at this time of year, Fremantle will sit out and build quantity for the following week 52. Sydney and Melbourne will offer on Tuesday and Wednesday, with vastly lower number of lots to sell.