An incredible week at the Australian wool auctions. Merino wools sold 120 to 180ac dearer whilst crossbred types were 60ac dearer. The passed in rate of just 1.8% tells the story as growers jumped at the chance to take the better money on offer. The EMI closed the week at the highest point since June 2022.

The recently concluded Nanjing Wool Market conference was widely believed to be the most positive and best opportunities for business since 2018. Key factors driving the positive momentum this week include:

Lower than normal inventory (stock) is being held by a majority of first stage and a portion of the second stage and beyond makers and processors. Greasy wool stocks from all origins is at historical low levels and most mills were looking to renewal.

Demand has lifted, more volume of wool products is moving through the supply chain and more swiftly allowing for turnovers to improve. Much of this new business is made up of blends mostly to meet price points as retail recovers and uniform business starts to build again.

Some of the mid-size China mills had relied upon a local single entity for supply that has now changed and appear to have adjusted their business model. Those mills are now using forward contracts written directly from the overseas traders, creating more competition.

Demand for Europe now relies partly on China produced tops or yarns. Many mills in China now compete for that higher quality, potentially more lucrative business. The dominant supply for that consumer and manufacturing market relies upon certification of RWS/NM to be carried through to the exported product from China to Europe. Demand is predicted to keep rising for that product supply chain and calls to increase supply of RWS/NM was placed in front of all wool producing nations.  

Australian traders had/have very little stock left to sell so they must be aggressive in auction to meet the higher demand and predicted business opportunities going forward into what was being widely tipped as a sustainable bull run in the short term.

Next week sees a little quantity drawn out from stores and grows to around 35,000 bales being offered. Sales held Tues for WA and Tues/Wed for East.