China Covid announcement lifts market

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The importance of China to the Australian wool market was dramatically reinforced this week, with an announcement by the Chinese government that the hard-line approach to CV 19 would be modified. This caused mills to quickly increase orders via their exporters to secure supply for an expected ramping up of mill activity as a result of the expected less interrupted factory activity in the New Year.

The Eastern Market Indicator (EMI) rallied, gaining 54ȼ to 1278ȼ/kg, and with a stable Aussie dollar (+0.07ȼ to US$0.67), the EMI when expressed in US$ also improved 37ȼ to settle at 857ȼ/kg (US).

The Western market indicator also felt the new found demand, and following the lead from the east coast market, lifted 49ȼ to finish the week at 1419ȼ/kg.

With a three day sale scheduled, Melbourne sold on its own on Thursday, and in a positive pointer for next week all MPG’scontinued to lift with AWEX reporting an overall lift of 20 to 40 cents, while the 16.5 & 19.5 MPG’s were quoted 50 cents dearer on the day.

The Crossbreds section showed signs of life with the 28 MPG in Melbourne up 23ȼ, while the 30 MPG also posted a 12ȼ improvement across the week.

Cardings bucked the general market move and were quoted generally steady to easier, down 1ȼ in Sydney, back 12ȼ in Melbourne and lower by 9ȼ in Fremantle.

Another increased volume to last week of 40,716 was offered for sale, 3,000 up on last week. After 6.3% of the original rostered offering was withdrawn prior to sale, the pass-in rate fell as a result of the stronger market, down from 17.9% to 7.7% of this weeks offering.

As a result 38,787 bales were sold, a massive 6,500 more than last week. This was also well above the seasonal weekly average of 33,394 bales.

This week on Mecardo, Andrew Woods looked at the impact of the extraordinarily wet spring and summer period and the effect it has had on wool getting to market. There will be some delayed wool arriving into sale during the next 3-4 months, adding to sales volumes. In a time of weak demand this will put some downward pressure on price but growers have demonstrated their willingness to reduce volumes cleared to the trade if prices fall, thereby steadying the market.

The week ahead….

Next week sales have rostered an even larger offering of 49,803 bales for sale across the three selling centres. Fremantle & Sydney are selling on Tuesday & Wednesday, while Melbourne will again have a three day sale to cater for the increased offering.

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Data sources: AWEX, Mecardo

Photo Credit: Sarah Parker

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