Managed supply lifts wool market

Bidding from local export traders dominated the wool sale, resulting in a decrease in the pass-in rate to 4.8%.  The Eastern Market Indicator lifted 7¢ to 1169¢/kg. This was the first rise for four weeks and was also noted in the Fremantle market, where the WMI rose 17¢ to 1271¢/kg.

After experiencing some volatility post-US election, the Au$ ended the week stronger. This resulted in the US$ EMI level posting a 13¢ gain to close at US$ 749¢/kg.

AWI reported that the first-stage topmakers were out-bid by local exporter traders. This may become significant as with only six weeks until the three-week Christmas break, topmakers will need to secure enough stocks to maintain mills. With the supply of wool somewhat constrained compared to last year, this could induce a period of activity by the topmakers causing a lift in the market.

Crossbred wool in Northern and Southern markets saw modest price gains, with 28MPG increasing 7¢ to 402¢ at the Auction in Melbourne.

The best performer in the cardings market was Fremantle, posting a 20¢ lift, with Melbourne also positive rising 7¢, however, Sydney was down 4¢.

With a clearance rate of 95.2%, 33,695 bales were sold, 1,492 fewer than last week but 2,335 more than the weekly average for this season.

In the previous week, Andrew Woods asked the question “Is wool consumption or wool production driving changes in supply?” (read more here). Wool consumption as a proportion of total fibre consumption has been falling, as a growing population seeks expanded sources of fibre. However, ‘Wools ain’t wools’ – not all categories of wool have shrunk in recent decades, with 19 micron and finer categories increasing in volume. The potential for wool consumption does not seem to be a limiting factor given the staple fibre market in total is around 60 million tons per year and total wool production (everything included) is around one million tons. The limit on consumption is the volume grown.