As widely anticipated by many of the traders, the Australian wool auctions took a step back this week. The severe price gains of the last two weeks were thought to need a respite for the far end of the supply chain to adjust or not to these new levels. 

The old wool trader adage that “the market is usually going up via the stairs but comes down via the elevator” is being tested again in this erratic market scenario being played out. The past three weeks has evidenced the exact opposite to that saying with the previous weekly gains doubling that of this week’s retraction.  First stage processors alongside the exporters had been able to dispose of some stocks advantageously, so in a sparse margin year, some caution had to eventually enter strategic thinking. 

Merino wool prices in the fleece sector fell away by a general 40 to 70ac/clean kg in both Eastern selling centres and 25 to 40ac/clean kg in the Western Australian market. Merino skirting types (brokens, pieces, and bellies) were not as affected but still tracked 40ac lower on a very general average. The carding wools bucked the trend and traded under a firm unchanged outcome, but these types were much more subdued in the price hikes. Crossbred wool descriptions were 30ac lower for the week.  

One of the leading trade exporters stated that in theory, we should be running into support levels for a few types but let’s see what happens over the next few days and weekend. One of the largest Chinese top makers had almost no interest in the last to sell Sydney auction on Thursday which placed a dampener on proceedings.

Another significant player on the buying side was a bit more positive by looking forward a few weeks out and saying let’s just get through the 40,000 bales next week and see what happens.  He is confident that following next week’s activity, that should see the market price being set as we would then go back into lower volume sales and perhaps placing upward price pressure once again.

Next week has around 39,000 bales of Australian wool offered across all three centres and all on the Tuesday/Wednesday selling day roster.